The declining number of residential new build developments is taking its toll on the construction sector with workloads falling at the most dramatic rate for over a decade, says the RICS UK Construction Market Survey published.

Construction workloads declined at their fastest pace since Q3 1995 breaking more than 11 years of uninterrupted growth with 19% more Chartered Surveyors reporting a fall than a rise.

The worst performing area by far is the private housing sector, with workloads declining at the fastest rate in the survey’s history (Q2 1994) with 39% more Surveyors reporting a fall than a rise. House builders, reacting to the market downturn and the credit crunch, have had no option but to severely limit output, putting the Government target of building three million new homes by 2020 even further out of reach. 240,000 new homes are needed each year to reach this target and with only 175,700 built in 2007, this is now becoming highly unlikely.

The largest workload declines were felt across Wales, Scotland and Northern Ireland. Non-housing workloads fell rapidly, and crucially, workload growth in public commercial construction also turned negative.

Some sectors are still reporting small levels of growth such as infrastructure, with 1% more respondents reporting a rise than a fall (a drop of 11% compared with Q1) and private industrial, with 4% reporting a rise than a fall (a drop of 12% compared with Q1).

Prospects for the next twelve months do not provide much ground for optimism either, with confidence in workloads reaching the lowest levels in the survey’s history and employment levels turning negative. In addition, profit expectations continue to decline and are becoming increasingly negative. This depressed pattern of continuous decline is visible across all survey indicators.

RICS senior economist David Stubbs said: “Up until now we have been seeing growth in the construction industry slowing down; however these figures show that workloads are actually falling in almost every sector. This decline can be attributed to the lack of availability of debt finances and the fall in prices, which is taking its toll on developers. If this pattern continues then the industry will have to start making significant cut backs. This downturn will also have a negative effect on housing targets, which will not be achieved at current levels of output.”

source: RICS