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Are Construction Loan Delays Holding Back Growth?

London’s construction industry saw that its growth had been held back in 2018’s last quarter. The delays are thought to be due to skills shortages and uncertainty due to Brexit.

Results from a recent survey carried out by the Federation of Master Builders showed that the capital’s construction workloads as far as SME’s are concerned were positive in 2018’s last quarter. However, the rate that they grew at was slower than 2018’s third quarter.

Other results showed that:

  • A fifth of construction SME’s had to stall their projects due to construction loan delays or refusals from banks.
  • Bricklayers were no longer the trade that had the shortest supply. Carpenters had the shortest supply with as much as two-thirds of companies having difficulty hiring those with much-needed skills.
  • Hopes for the future were weak for the third quarter in a row with one-third of SME’s looking to have a higher workload in 2019’s first quarter. This is a slight fall from 2018’s final quarter.
  • Almost nine out of ten builders thought that prices of materials would rise within the first half of the year. This was up just 1% on 2018’s third quarter.
  • Two-thirds of companies thought that salaries and wages would increase over the first half of the year. This was up from just over half of companies in 2018’s last quarter.

Structural Defects Insurance

Slowed Growth and Delayed Decisions

The growth of construction sector SME’s in London slowed in 2018’s first quarter. This is likely to be due to uncertainty surrounding Brexit and Parliament’s struggle with agreeing a deal with the European Union. Homeowners are taking time with any decision they make regarding their home improvement or expansion projects and in addition to this, almost 50% of builders said they had seen signs that indicated the housing market had weakened in 2018’s last quarter. With less than two months to go before the UK officially leaves the EU, construction SME’s are still in the dark on what the deal will mean for the construction sector.

Barriers to the Industry

There are many concerns that financial difficulties have become something of a barrier for construction companies in London. These difficulties had no doubt contributed to the lack of growth in 2018’s last quarter. As many as one-fifth of projects have been stalled because of financial delays. When you couple this with the ever-growing cost of materials and wages, it results in some very tight margins.

Specialists in Construction Insurance

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