Tender prices will continue to rise in the next 12 months in the construction sector, driven by growing costs and labour shortages, according to the latest Royal Institution of Chartered Surveyors (RICS) market survey.
In the latest survey 69% of respondents said they believed tender prices would go up in the building sector rather than fall – with expected increases in tender prices signalling rising costs and shrinking profit margins for many firms.
This is line with 12-month expectations of profits dropping from +26% in Q4 2016 to +18% in Q1 2017.
Labor shortage was cited as one of the main costs and pressures for rising prices and skill shortages were still cited as a significant problem with 53% stating it to be a key impediment to growth. This is slightly up from 50% in the previous quarter.
Specifically among the trades, 65% reported insufficient availability of quantity surveyors as a growing area of anxiety for the sector, something that has become increasingly prominent since 2012. The shortage of bricklayers also remains a problem.
Survey results point to the quality of available workers (rather than quantity) being the principal driver of skill shortages, with 67% of respondents taking this view.
Looking at this further, 59% of contributors felt that improved education pathways and training would be the most effective policy response to alleviate labour supply pressures, while 31% of contributors stated direct government subsidisation of training would be the most effective.
