NI construction professionals less optimistic at start of 2022
Construction workloads in Northern Ireland fell again in the final quarter of 2021. Surveyors here are far less optimistic about the outlook than their counterparts across the UK. Skills shortages and material costs continue to present major challenges to the construction sector in NI. These are the headline findings of the RICS & Tughans NI Construction and Infrastructure Monitor Q4 2021.
Construction activity in NI fell in Q3 and Q4 of 2021. The key metric capturing current workloads was -13% in Q4; indicating that the majority of respondents (13%) reported a fall in Q4 activity rather than a rise. Falls here contrast worryingly with all other UK regions where a firm increase in workloads was recorded.
Factors currently impacting construction activity in Northern Ireland
Key factors cited by NI surveyors as impacting on construction activity here:
- acute labour shortages
- rising material costs
- shortage of quantity surveyors – 71%
- shortage of other construction professionals – 63%
- difficulty in finding bricklayers – 71%
Negative outlook for NI construction workloads and profit margins
Public housing was the only subsector in Northern Ireland where a rise was reported. The Infrastructure and private commercial sectors experienced further declines. Regarding the future outlook, a net balance of just 6% of NI surveyors said that they expect workloads to be higher in a year’s time. This compared to a UK average of 45%.
With material costs rising quickly, NI surveyors expect profit margins to be squeezed in the next 12 months. The net balance for profit margin expectations in NI was -24%, indicating a distinct lack of confidence in future profitability.
There is clearly a less upbeat tone to the feedback from Northern Ireland than elsewhere in the UK. The concerns around labour and in particular, skilled labour, are not going away, and appear to be even more acute here than elsewhere. It is very concerning that NI surveyors are considerably less upbeat about the year ahead than their counterparts elsewhere in the UK.
Remote working and lack of stable government not helping
With the newfound ability to work from home, many construction professionals are finding better-paying jobs outside of NI while benefitting from Northern Ireland’s comparatively low cost of living. This is a new and challenging development for the sector.
Clearly, we have a long-term challenge to attract more young people to the sector but that will not address the immediate problems which are also leading to expectations of a sharp rise in wage costs over the next year.
Government can do more to support the construction sector, especially through greater consistency in procurement and other measures. But first and foremost, we need a stable government and ministers making decisions for the benefit of the economy and the people.