Financial constraints holding up construction workloads in London


Construction workloads in London and the South East remained unchanged amid financial constraints, which were reported by 80% of national respondents to be the most significant impediment to building activity, according to the results of the Q2 2018 RICS Construction and Infrastructure Market Survey.

In Q2 2018, 11% more chartered surveyors in London and the South East reported that their workloads had risen rather than fallen, remaining unchanged compared to previous net balance readings of +12% in Q1 2018 and +12% in Q4 2017.  80% of national respondents noted that financial constraints were a limiting factor to building activity – the joint highest reading in five years. Respondents have often cited financial constraints to be causing difficulties in recent reports, and more specifically access to bank finance and credit, cash flow and liquidity challenges or less favourable cyclical market conditions.

Alongside financial constraints, planning delays and restrictive regulations have also been cited as continuing to limit activity. Although labour shortages continue to be referenced as a factor impeding growth, the number of respondents citing this as the most prominent factor has dropped.

The RICS quarterly series indicated growth eased across nearly all sectors in Q2, except the public housing and private housing segments which observed slight rises in London and the South East compared to Q1. Public housing rose to a net balance of +10% in Q2 from +2% in Q1, while private housing activity increased to +15% in Q2 from +11% in Q1, in the region.

Moving to industrial workloads – contributors reported that the sector’s workloads remained similar to last quarter’s with a net balance of +10% in Q2 from +11% in Q1.

The momentum of growth in infrastructure activity has slowed noticeably in London and the South East with just 6% more respondents reporting an increase rather than a decrease this quarter, moderating from a net balance of +17% in Q1.