House-building but infrastructure still weak

RICS construction spokesman for Northern Ireland Jim Sammon
RICS construction spokesman for Northern Ireland Jim Sammon

Strong growth in house-building led to a pick-up in overall construction activity during the second quarter of this year, according to the latest RICS and Tughans Northern Ireland Construction Market Survey.

A net balance of 56% of surveyors across the province reland reported a rise in private housing building during the past three months, compared to 26% in the previous quarter.

In contrast, however, infrastructure workloads fell sharply, with the balance of Northern Ireland surveyors (-16%) pointing to a drop in activity. Northern Ireland was the only region of the UK in which the balance of surveyors reported a decline in infrastructure workloads.

“Overall, the report is pointing to rising construction activity, driven by house building, but we are not seeing evidence of any pick up in infrastructure investment, which is essential to future economic growth,” said RICS construction spokesman for Northern Ireland Jim Sammon.

“Surveyors are also expressing concern about the potential impact of Brexit on some investment plans in the construction sector.”

Michael McCord, construction partner at Tughans said the latest survey chimes with the anecdotal evidence from the market, where there have been a range of residential development schemes coming forward.

“However, the lack of infrastructure activity and the potential impact on investment plans from the EU Referendum result will be of concern to firms in the sector.

“On the positive side, the weakening of sterling since the June 23 vote could help increase the competitiveness of Northern Ireland companies working south of the border.”

The overall workloads balance rose to +24% from +13% in the previous quarter as a result of the strong growth in house building, as well as rising private commercial activity.

In terms of the 12-month outlook, sentiment amongst surveyors in relation to workloads remained broadly unchanged from the last quarter. Employment expectations however softened, and expectations for profit margins remained weak.