London construction activity slows as Brexit uncertainty and planning delays hit growth

Kasmira Jefford
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This is the second survey to warn on slowing construction activity (Source: Getty)

London's construction market suffered a sharp slowdown over the quarter, despite recent government efforts to encourage more housebuilding and deliver more homes across the capital.

The Royal Institution of Chartered Surveyors' construction market survey found that private housing workloads rose at their slowest pace since fourth quarter of 2012, with only 20 per cent more of those working in the sector reporting a rise in activity rather than a fall over the first three months of the year.

That contrasts with 44 per cent reporting growth during the last quarter of 2015, suggesting a significant slowdown in activity.

This easing in the private housing sector was not offset by any increase in public housebuilding, with growth in this sector remaining broadly unchanged from the previous quarter, and just 11 per cent more surveyors reporting a rise rather than a fall in activity.

RICS chief economist Simon Rubinsohn said delays in the planning systems continued to be one of the biggest barriers to growth, as well as the availability of land, while uncertainty over the EU referendum outcome had also slowed activity in the quarter.

"We know that a range of sectors have been affected by these issues as investors look to delay any decisions until a final outcome has been determined, and construction is no exception.”

Read More: EU referendum blamed for weak construction figures

Separate research from property firm JLL tells a different story for London's commercial property market. The property firm said construction of new office and retail schemes in the capital reached its highest level since 2008, with activity totalling £7.4bn at the end of the first quarter.

The level of speculative office development under construction in central London totalled 8.3m sq ft at the end of the quarter, well ahead of the long term average of 5m sq ft, indicating that developers are continuing to respond to London’s burgeoning requirements for new office floor space.

Among the biggest starts was Derwent London's Brunel building in west London, spanning 241,000 sq ft.

Helen Gough, lead director of JLL’s buildings & construction team, said: “Generally, the construction industry remains cautious, however a recent fall in costs has offered some rebound for the commercial sector. While total construction starts fell marginally this quarter, construction data on the whole remains volatile. Construction activity levels remain solid with London showing notable signs of resilience.”

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