Growth in the
construction industry could be held back by a weakening housing market, rising
costs and an increasingly nervous banking sector, according to the Federation
of Master Builders (FMB).
The FMB’s latest State of Trade Survey
showed that workloads for construction SMEs grew in Q4 2018.
Despite this, there
are serious concerns about the mounting problems facing small building firms,
including:
- 42% of builders have detected
signs of a weakening housing market;
- One in five construction SMEs
have had projects stalled in the past three months due to delays to loans,
or loan refusals, from the banks;
- Carpenters overtake
bricklayers as the trade in shortest supply with nearly two-thirds (64%)
of construction SMEs struggling to hire carpenters and joiners and 61%
struggling to hire bricklayers;
- Looking ahead, expectations
for the future weakened for the third consecutive quarter, with just one
third (33%) of construction SMEs anticipating higher workloads in Q1 2019.
This is down from 36% in the previous quarter;
- 87% of builders anticipate
that material prices will rise further in the next six months, slightly up
from 86% in Q3 2018;
- Two-thirds (66%) of
construction SMEs expect wages and salaries to increase over the next six
months, up from 58% in the previous quarter.
Brian Berry, Chief
Executive of the FMB, said: “Workloads for small construction firms continued
to rise in the last quarter of 2018 but after 23 consecutive quarters of
growth, these latest results could mark a tipping point.
"Mounting
Brexit uncertainty is starting to have a tangible effect and the indicators are
not good with almost half of builders reporting signs of a weakening housing
market. Furthermore, a worrying one in five construction SMEs has had projects
stalled in the past three months due to delays to loans, or loan refusals, from
the banks.
"Together with
ever-rising costs due to material price hikes and labour shortages, the
headwinds are blowing in the wrong direction for the UK construction sector.
“Carpenters and
joiners overtake bricklayers as the trade in shortest supply for the first time
in more than a year.
Naturally, these
shortages are resulting in workers commanding higher wages and this is causing
issues for construction employers. These rising costs, coupled with steadily
increasing material prices since the UK referendum, are squeezing the margins
of constructions SMEs – making a profit has never been more challenging.”
“But more than
anything, political uncertainty is the enemy of small building firms. Most
construction SMEs work predominantly in the refurbishment sector and they rely
heavily on the confidence of homeowners to spend their cash on home improvement
projects.
"There is
clearly a desperate need for political certainty but with less than two months
to go until we leave the EU, we’re none-the-wiser about what lies ahead. Brexit
deal aside, the Government is also happily ignoring the views of business as it
designs its post-Brexit immigration system.
"If the
Immigration White Paper remains as is, the construction industry will not be
able to hire sufficient numbers of tradespeople from abroad and the industry
will stall. The Government’s house building targets will therefore be no more
than a fantasy.”
