The Current State Of The UK Construction Industry

current state of uk construction industry

UK housebuilding has reached the highest level since the recession hit after the mortgage crisis, with new build projects being approved across the UK. In light of the current housing problem our government is facing, this is great news for both them, and the construction industry. Niftylift, retailers of cherry pickers, investigates how new build projects are helping the industry grow and evolve, discussing other influential factors that are affecting the success of the construction industry. 

Industry Growth 

The government appears to be actively encouraging as many new build projects where they can to solve the housing shortage. Whilst 60% of local councils are optimistic about meeting the local demand, 40% of local councils have admitted that they fear they don’t know how to meet the local demand for housing. However, the government is keen for those councils to use the housing strategy whitepaper to build new homes. For the construction industry this is great news, offering new opportunities across the nation. 

In December 2021, new builds were estimated at 41,620, an increase of 5% compared to the previous three months and an increase of 13% on the year previous – and the demand continues to grow. In fact, in the early months of 2022, the industry experienced fast growth on new orders, hitting a two and a half year high, with house building projects revealed as the strongest driver behind the growth. In Q2 of 2021 alone, there was over £5.6 billion worth of private sector orders for house building. This was 83% of all house building orders to the construction industry. 

The introduction of digital technology into construction processes is also expected to boost the industry’s growth. New developments such as virtual reality systems have received investments which could cut costs by up to 25%. The industry continues to implement ground-breaking technology to reshape the industry to keep up with changing trends in the environment. As industry professionals recognize that we now live within a digital age, it’s only right to build a digital environment. If technology is integrated into construction projects as part of a broader strategy, it could be a significant step towards a connected future for the industry. 

Challenges For The Industry 

However, it isn’t all good news for the industry – whilst the industry currently employs an estimated 2.6 million people, professionals fear there is a lack of skilled workers available to meet the strong demand for construction. There could be further concerns as Brexit poses a shadow over the industry too. Many employers worry that the free movement of EU workers into the UK could cause an even bigger shortage of workers. At present, 30% of construction professionals admitted that hiring EU workers was a significant factor in the success of their business. 

The government has revealed that construction workers are not yet on the UK shortage occupation list – a list that could potentially give some sectors priority in the visa application process. This means the construction industry is at risk of potentially losing more than 175,000 EU workers if they don’t retain access to the EU labor market. This is a shortage of workers that the industry could do without. 

Brexit uncertainty has also cast a shadow of a weakening pound upon the construction industry – sterling has fallen around 13% since the UK decided to leave the EU. This has led to an increase in the cost of imported materials – and also means the industry could face a shortage of imported materials too when we officially leave the EU. Materials costs are currently at the highest cost in over five years as well, putting a financial strain on the industry. 

However, with the uncertainty of materials costs, and of importing materials, this could be the push the UK needs to start trading with fellow companies within the UK. 

Current Construction Companies Conclusion

There are influencing factors that are both challenging and boosting the real estate and construction industry in the UK. Whilst Brexit suggests an uncertain future with challenges that may mean change is needed in the industry, we must remember that many industry professionals still feel optimistic about the future of the industry – especially thanks to the housing demand.

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