LATEST housing market and house building figures from Nisra show that house prices and transactions, as well as housing starts and completions all rose in quarter one year-on-year.
From January to March, 1,982 new dwellings were started in Northern Ireland and 1,785 new dwellings were completed. In terms of housing starts, that is significantly higher than 2020 and represents the best start to a year for the house-building sector in more than 10 years.
Similarly, the latest Rics /Tughans construction and infrastructure monitor shows that workloads in Northern Ireland construction picked up in the first quarter of the year, with house building the main catalyst for growth.
A net balance of +8 per cent of Northern Ireland respondents to the survey reported rising workloads, up from -18 per cent in Q4 2020. Public housing (+75 per cent) and infrastructure (+51 per cent) workloads were reported to be rising quite sharply, but the net balances for private commercial (-50 per cent) and private industrial (-61 per cent) workloads were at the other end of the spectrum.
But despite the improvements, Northern Ireland was seen to be lagging other UK regions. Labour shortages, material shortages and financial constraints were the factors most cited by respondents as limiting construction activity currently.
Looking ahead, expectations for workloads in 12 months’ time remain relatively subdued with a net balance of just +6 per cent anticipating them to be higher. The biggest concern regarding the outlook is profitability, with respondents expecting profitability to be squeezed further over the next 12 months. One of the major factors in this issue with confidence is the big rises in input costs that the construction sector is experiencing.
Respondents are more optimistic about hiring intentions though, with a net balance of +57 per cent expecting to employ more people in a year’s time. However, with skills shortages being reported in the market currently, hiring could prove challenging.
On the skills front, the combination of the coronavirus pandemic and Brexit have created a situation where many migrant workers, on whom the local construction sector was very dependent, have returned home. It is therefore very challenging for the sector to access the skills it needs, across the board, including amongst quantity surveyors, bricklayers and other workers. As construction activity continues to recover as the economy opens up more and more, this will become an increasing challenge.
And it could impact on the ability to sustain the recovery in house building, therefore impacting on housing supply.
As Ulster Bank economist Richard Ramsay says, alongside severe skills shortages, the construction and housebuilding sector are severely affected by supply chain disruption - a shortage of building materials, a lengthening of supplier delivery times and significant price rises. And all of this acts as a headwind to increasing supply quickly.
But despite the challenges, the construction sector has a crucial role to play in a longer-term sustainable recovery. It is adapting to the challenge of climate change with significant adaptions to increase the environmental sustainability of new buildings ongoing. It is also creating the infrastructure the economy and society needs to thrive into the longer-term.
Government has an important role in assisting this. We need to properly fund and upgrade our water infrastructure, we need to invest in our transport infrastructure, our communications infrastructure and other aspects of infrastructure. Government also needs to ensure that procurement is reformed to meet the needs of the sector and ensure a transparent and level playing field.
:: Jim Sammon is construction spokesman at the Royal Institution of Chartered Surveyors (RICS), which in Northern Ireland has 3,000 cross-sectoral members comprising of chartered and associate surveyors, trainees and students.
