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Double blow strikes construction

The UK construction industry is facing its toughest year in more than a decade with the commercial and residential property sectors dealing it a double blow.
The Royal Institute of Chartered Surveyors UK Construction Market Survey reported growth in construction workloads fell to its lowest level since1996, as the effects of the credit crunch and demand for housing fell away.

Britain's £80bn building industry has taken a knock with growth in the industry slowing down abruptly in the first quarter of 2008.

The report said the worst hit sector was private housing with workload growth turning negative for the first time since 1999. The slump is due predominantly to a downturn in the North, but private housing has weakened across the UK and is static in London, the South East and the Midlands.

The RICS said 'Private residential workloads are now shrinking as home builders react to challenging conditions in the housing market by reducing the number of new homes under construction'.

Gordon Brown wants £3m new homes built by 2020, requiring 240,000 homes being built per year by 2016. However, the number of housing being built started dropping to just 166,820 in 2007, an early sign that housebuilders are cutting back.

'Private commercial workload growth has slowed rapidly as the downturn in commercial property prices and the looming oversupply in the pipeline forces developers to shelve plans for future construction'.
RICS has 140,000 members globally in 146 countries.

The RICS said 'Expectations for profit margins fell for only the second time in the survey's history with surveyor sentiment falling sharply as growth in the private commercial and private housing sectors slowed'

'It is likely that the combination of reduced building activity in private housing and private commercial sectors will act as a major drag on the construction industry over the balance of this year.'

2 April 2008

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