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Housebuilding forges ahead but other construction sectors see activity fall

The second quarter of 2019 saw further declines in local construction activity in Northern Ireland as all subsectors other than private house building saw marked falls in workloads, according to the latest RICS and Tughans Construction and Infrastructure Market Survey.

A net balance of 58 percent of Northern Ireland surveyors recorded rising workloads in private housing activity in the last quarter, which is the highest rate since Q1 1999.

Despite this beacon of light for the sector, overall, Northern Ireland remains the only region of the UK where overall workloads are reported to be in decline.

Infrastructure, public housing and public-non housing subsectors continue to be in marked decline, with respondents to the survey indicating that the lack of a NI Executive and Assembly is hindering the allocation of funding for projects.

In addition, Brexit uncertainties are perceived to be affecting investment, with private industrial and private commercial workloads falling.

On a more positive note, the 12-month forecast in terms of employment and workloads has risen, albeit with the latter being low in comparison to the wider UK.

Jim Sammon, RICS Northern Ireland Construction spokesman, said: “The new build private housing market continues to perform well. However, construction activity is no doubt affected by ongoing political instability, which has had a considerably negative impact on public works in particular.

“The political landscape also isn’t conducive to attracting investors who want to see stable government. It also doesn’t help when firms are attempting to encourage the brightest and best to stay and work in Northern Ireland,” he adds.

David Jones, Head of Real Estate, Tughans said: “Undoubtedly, one of the main external factors affecting the construction sector is the current political landscape. Projects and works that require the allocation of funding cannot be progressed, and the situation has a knock-on effect on other areas, leading to increased caution when it comes to investment decisions.”

“While private housing continues to be a shining light in NI construction, overall the sector is facing a slow-down and we would hope the optimistic outlook for the year ahead is realised, with growth returning to private commercial, infrastructure and other public works. Build to rent schemes and more proactive joint venture activity from the local authorities need to act as the main market drivers over the months ahead”, he adds.

Northern Ireland findings of the latest survey  

  • The net balance of workloads/activity for Q2 was -10%, meaning that 10% more respondents perceived a fall in workload in Q2 2019 than those reporting rises
  • Public non-housing activity continues to decline according to a net balance of -46% of respondents, with a net balance of -25% also reporting a dip in private commercial works
  • Infrastructure and private industrial activity both experienced a sharp drop further into negative territory according to a net balance of -36% and -64% of respondents respectively (after recording -13% and -14% in Q1)
  • Public housing workloads continue to suffer, with a net balance of -46% of respondents reporting a decline
  • However private housing has experienced a significant increase as a net balance of 58% perceived a rise in activity
  • Looking ahead, Northern Ireland surveyors are quietly optimistic about the next 12 months and lagging behind their UK counterparts. Expectations for employment has recovered slightly, with a balance of 31% forecasting an onboarding of staff, despite the predictions of workloads being the lowest in the UK (net balance of 25%)
  • NI respondents are expecting profit margins to remain in negative territory in the year ahead, with a net balance of -21% (the lowest in the UK)