Housebuilding costs rocket in fourth quarter, says RICS

The cost of building new homes in the UK has rocketed in recent months due to a continued skills shortage, putting government targets even further out of reach.

New research by the Royal Institution of Chartered Surveyors (RICS) has revealed a lack of skilled workers in the construction industry pushed wages up by more than 6% in 2015, with nearly two thirds of those surveyed saying sector wages are continuing to rise.

Not only this, but government's target of building 100,000 new homes a year to sort out the country's housing shortage is being put at risk by the skills shortages.

The skills shortages is the biggest barrier to growth in the UK construction sector, the survey found, with specific difficulties in finding bricklayers and quantity surveyors hitting two thirds of companies surveyed.

“While workloads are still growing at a relatively healthy pace, labour shortages in the construction sector are causing delays at different stages in the development process and leading to significant problems with project planning," said chief economist Simon Rubinsohn.

He said the higher industry wages could encourage skilled workers to return to the sector, as well as drawing school leavers and graduates towards construction industry careers.

RICS skills and talent director Sally Speed added:
“The construction skills crisis is slowing growth in a sector that is vital to UK plc. Unless government looks to address the problem urgently, some of its key housing and infrastructure programmes could soon face crippling delays and spiralling costs."

Despite some concerns about financial constraints, 45% of companies expect profit margins to rise over the year to come.

The survey revealed that a net balance of 33% of respondents were still seeing an increase in the number of new projects they were taking on down from 39% in the third quarter.

The private commercial and private housing sectors continue to be the key drivers of construction activity.