Commercial Property News

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Thursday, April 20, 2023

RICS UK first quarter 2006 construction survey

A steady supply of labour from Eastern Europe is helping keep wage inflation down and skills shortages to an almost record low says RICS UK construction survey, published 14 April.

Overall, 23% more chartered quantity surveyors report a rise than a fall in activity, up from 20% in the last quarter of 2005. Scotland leads Wales as the UK construction activity hotspot. Growth is being driven by strong private house building and commercial property construction.

Despite this, the supply of labour has undergone a marked improvement with only 28% of the survey's 178 respondents reporting shortages of skilled workers. This is the second lowest reading in the survey's history, behind 25% in 1999 and a dramatic drop from the survey high of 46% in late 2003. London and the South East have experienced the greatest fall in skills shortages over this period which fits geographically with inward migration of construction workers from new EU member states.

RICS has recently collected separate data which, for the first time, shows how the influx of overseas professional skills (as opposed to skilled manual labour) is relieving upward pressures on professional salaries in the construction industry. The same survey reports that growth in the wages for skilled labour has been contained in the last year. For 2005, wage rises matched the economy as a whole having been significantly stronger in 2004.

RICS economist, David Stubbs, says: "Gathering strength is evident in several areas of the industry with growth in the housing sector the strongest in almost two years as buyer activity has improved. Continually rising commercial property values are spelling larger profits for developers, propelling a strong rise in workloads for the sector."

"With competitively priced overseas labour, the 'Olympic effect' and government spending plans likely to bring a further boost, next year is looking rosy for many construction companies. Sharply increasing prices for materials such as steel and copper are the only potential blot on the landscape but the industry will continue to shrug these off while property values rise."