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Supply chain pressure and shortage of staff continue to hamper market

The RICS construction and Infrastructure survey for Q2 2021 has confirmed that the supply chain is struggling under the huge pressure of keeping up with the increase in new housing and infrastructure across the UK.

An increase in the private residential sector continued to lead in the construction market. 50% of respondents reported an increase in activity (this is up from 39% in the previous quarter, and is the strongest figure in the last six years). And, the infrastructure sector also saw a rise, with a net balance of 45% seeing an increase in activity (this is up from 34% in the previous quarter).

Whilst responses indicate that the construction sector is recovering well from the COVID-19 pandemic, tough constraints were becoming more apparent. Over 80% were experiencing difficulties with the shortage of materials, and around two-thirds stated they are having further issues with the lack of labour – both of which having a huge hampering impact on the market.

The concern around the labour shortage is for both skilled labour and ‘white-collar’ roles. A net balance of 64% stated that this issue is limiting of new activity (this has increased from 42% in the previous quarter).

As the construction supply chain continues to increase in demand and workload, respondents predict that a further 10% increase in material prices is to come.

Simon Rubinsohn, RICS Chief Economist said: “Infrastructure and private housebuilding are viewed as likely to remain the most buoyant areas of the industry. Yet it is abundantly clear that a couple of issues present big challenges. Most notably at this point, the availability of building materials stands out as a key problem for respondents to the RICS survey.

“But almost as significantly, labour and skills are increasingly being cited as obstacles for businesses looking to build out existing commitments or embark on new projects. For the time being, the issue appears most visible regarding skilled trades but quantity surveyors are also being highlighted as an area of growing shortage.

“Unsurprisingly against this backdrop, some concern is being expressed about rising construction costs.”

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