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Access to Finance Holding Back Welsh Construction Sector

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Brexit uncertainty and difficulties accessing finance continue to limit growth in the Welsh construction sector, with workload growth easing back in the second quarter of 2019, according to figures from the Q2 RICS (Royal Institution of Chartered Surveyors) Construction & Infrastructure Market Survey.

14% more respondents in Wales reported an increase in construction workloads in Q2, down from a 20% net balance the previous quarter. Relative to other sectors of the Welsh construction industry, workloads in public housing grew at the fastest pace, followed by private housing and other public works.

Meanwhile, workloads in the Welsh infrastructure sector grew in Q2 and there was also modest growth in commercial and industrial activity.

Workloads in the other public works subsector were reported to have fallen and workloads in the commercial sector were said to be flat.

Looking to the year ahead, construction activity in Wales is expected to be most resilient in the private housing and infrastructure sectors with 25% and 38% more Welsh surveyors, respectively, anticipating activity to rise rather than fall. However, surveyors in Wales remain relatively cautious about the overall outlook, with a net balance of 14% expecting construction workloads to be higher next year.

Obstacles to growth cited by respondents include access to finance, which continues to be the biggest impediment to building activity in Wales (cited by 89% of respondents). Respondents pointed to planning and regulation as the next biggest obstacle (cited by 65%). Anecdotally, Welsh respondents also continue to cite Brexit uncertainty as a limiting factor.

RICS Senior Economist, Jeffrey Matsu, says:

“Three years on and the long, unrelenting shadow of Brexit uncertainty is testing the mettle of the construction industry. With the range of possible outcomes related to Brexit as wide as ever, we expect to see continued volatility in the construction output data.”

Luke Roberts of Roger Roberts Survey in Swansea said that Brexit was the main influence on the market in Wales at present.

Geraint Morgan MRICS of Watkin Jones Group in Cardiff noted:

“Material delivery periods have lengthened on plasterboard, clading and fire barriers post-Grenfell. Some consultants are experiencing difficulty in obtaining insurance at reasonable market rates for professional indemnity insurance for highrise structures.”

RICS promotes and enforces the highest professional qualifications and standards in the valuation, development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards – bringing confidence to markets and effecting positive change in the built and natural environments.