SMALL housebuilders operating in the social housing market are facing their lowest workloads since 1999.
According to a Federation of Master Builders report, the SME building sector has now been in recession for four years, with 66% of building firms reporting reduced workloads in the first quarter of the year.
This is worse than the previous FMB update from the end of last year, in which 45% reported drops.
FMB chief executive Brian Berry said the private housing sector had also reported falling workloads, with 55% indicating a drop compared with 45% in the last quarter. “These dismal results for small builders demonstrate the length and severity of the recession in the construction sector, not helped by the fact that 84% of firms expect building materials costs to increase over the next six months,” he said.
Around 28% of firms reported an increase in inquiries over the quarter, while 40% said there was a decline. This compares to 20% and 50% respectively in the last quarter.
The FMB warns further falls in workload are expected in the second quarter.
However, the State of Trade survey for the first quarter did indicate improvements in three of the nine sectors, with 15% of those polled in the public new-build sector reporting higher workloads. While 55% do not expect to change employment levels in the six months to September, the number expected to bring in new staff inched up 1% to 14%.
On a regional level, the net balance between those reporting higher and lower workloads rose in nine of the 12 regions. Falls were recorded in the Eastern region, the East Midlands and Northern Ireland.
The North East rose from a balance of -49% in the final quarter of the year to -37% in the first quarter.
Northern Ireland remains the most negative at -51%, while the South East is the healthiest comparatively at -7%. Berry believes the Government needs to act to reduce “red tape”, and focus on making sure SMEs receive support from initiatives introduced into the sector. He said: “The fact that workloads for small house builders are at an all-time low is very worrying given the nation’s chronic shortage of affordable housing.
“Although the Government has introduced a number of promising initiatives to try and help the industry, support tends to be awarded to the large volume house builders meaning SMEs still miss out.
“The industry has lost around 69% of its smaller firms since the late 1980s and will lose even more of them if the Government and local authorities continue to drive them out of the market with the additional burdens of red tape and financial contributions that they are expected to pay.”