West Midlands construction to turn a corner in 2013

January 15, 2013

RICS Construction Market Survey, Q4 2012

The West Midlands construction market is expected to turn a corner this year, with chartered surveyors predicting output to increase in 2013, says the latest RICS construction market survey.

Last quarter, 42 percent more surveyors across the region reported that they expect workloads to grow over the coming twelve months but this follows what was a horrendous year for the sector.

This upturn is reflected in the small increase in reported workloads in the final three months of 2012. Over this period, a net balance of five percent more respondents in the region indicated that activity had increased, with the most substantial gains being seen in infrastructure – which has been the focus of so much government attention – and private commercial development.

Significantly, despite the introduction of the Funding for Lending Scheme, some 89 percent of West Midlands surveyors believe that financial constraints are holding the industry back with almost two thirds citing insufficient demand. Not surprisingly, over half also claim that weather conditions have hampered a recovery in the sector.

Elsewhere, input costs continue to climb in the region with 25 percent more respondents reporting rises rather than falls. Prices have now been moving upwards since the end of 2010 and have been significantly outpacing output costs for some time.

Across the country, London and the South East and the North of England saw overall workloads rise by the biggest margin, while Northern Ireland and Scotland saw activity continue to drop by significant margins.

Commenting on the survey, RICS spokesperson for the West Midlands, Alan Carter of ABC Solutions (UK) Ltd said:

“The survey shows that the market is still unpredictable, with the 2012 Q4 analysis being slightly less optimistic than the previous Q3 analysis. However, the trend is still positive and there are signs that 2013 will bring some better news for the construction sector

“Most notably, the numerous measures that the government has introduced with a focus on infrastructure appear to be bearing some fruit. In particular, the £37.5 billion investment announced by Network Rail has come at a good time and maybe other companies will now reconsider their investment plans.

“Elsewhere, work is still not in abundant supply and margins continue to be squeezed, now with the added pressure of rising input costs.”