House building growth placing new pressure on labour and supply chains
THE north's construction supply chain has struggled over the last three months to keep up with increasing new housing and infrastructure development, a report says.
And with skills shortages pushing up wages and material shortages leading to spiralling costs, respondents in the latest Rics/Tughans NI Construction and Infrastructure Monitor say they expect profit margins to continue to be squeezed over the next year.
The report, covering April, May and June, found that while workloads showed strong growth, there were problems reported with the cost of materials and shortage of staff to deliver projects.
A quarter of all Northern Ireland respondents reported a rise in workloads in quarter two, driven by private residential sector construction.
Infrastructure works also saw a big jump over the period, with a 83 per cent reporting an increase (up from 50 per cent in the previous quarter).
While respondents indicated the construction sector is now broadly recovering well from the pandemic, constraints on the market's return to normality were also becoming apparent.
Four in five (82 per cent) of respondents pointed to a shortage of materials hampering the market. And the cost of materials is expected to increase by 10 per cent over the next 12 months, with these projections running ahead of the 7 per cent growth anticipated for tender prices.
The latest survey also picked up concerns around labour shortages both for skilled labour and ‘white-collar' roles. Some 64 per cent of respondents said a lack of quantity surveyors will limit new activity while there were also increasing skills shortages reported in trades such as bricklayers.
Rics NI construction spokesman Jim Sammon said: “It's encouraging that workloads have continued to grow and expectations are for ongoing growth, albeit that workload expansion in Northern Ireland is being reported at a lower levels than elsewhere in the UK.”
Michael McCord, senior partner at Tughans, added: “With the demand for housing, it's no surprise building activity is recording strong growth. Even more significantly for the economy is the strong growth in infrastructure activity, which will support the recovery and enhance Northern Ireland's competitiveness for the longer-term.”