TSI
UK building industry facing severe shortages, says RICS survey
The UK’s construction industry is facing its greatest skills crisis since 1998, with bricklayers and quantity surveyors in shortest supply, a new survey shows. These highest skills shortage on record are set to limit sector growth potential but despite this a sharp growth in construction is reported across UK, according to the report from the Royal Institution of Chartered Surveyors (RICS). Over half of respondents, 53%, reported difficulty sourcing labour, with 71% saying they had particular difficulty sourcing bricklayers and 64% highlighting a shortage of quantity surveyors. During the same period in 2011, just 1% of respondents were struggling to find bricklayers and only 15% noted a shortage of quantity surveyors. In addition to labour supply, 69% of firms said that financial constraints, such as access to credit, were among the biggest constraints to growth, while 60% said that regulatory and planning issues were potent constraints. However, despite these challenges, the survey shows significant areas of growth, with the number of new construction projects increasing, particularly in private housing and commercial sectors. While official figures, which are often subject to revision, highlighted a slight contraction in output over the three months to August, a substantial proportion of respondents in the RICS survey reported an increase in their workloads, a net balance +39%, with 29% of firms saying that they were operating at full capacity. The private housing and commercial sectors continue to lead the growth in workloads with net balances of 47% and 46% respectively reporting an increase. However, momentum was least firm in the public sector with net balances of 12% and 21% reporting growth in workloads in the housing and non-housing segments respectively. Meanwhile, in the infrastructure sector, growth accelerated somewhat with a balance of 34% seeing workloads rise, up from 25% in the previous quarter. ‘While it’s exciting to see that the UK is experiencing growth across the construction sectors, future growth will only be sustainable if the growing skills crisis is addressed. The availability of both blue collar and white collar construction workers is reaching crisis point,’ said Simon Rubinsohn, RICS chief economist. ‘We haven’t witnessed a labour shortage of its kind in nearly 20 years. Without the relevant skills, we will not be able to grow many of the Government’s priority construction sectors such as infrastructure,’ he pointed out. ‘Currently, while we know that there is a serious shortage of skills, we don’t yet know why we have seen such a dramatic drop in the labour market over the past five years. Part of the problem is the legacy of the collapse in the sector following the onset of the Global Financial Crisis,’ he explained. ‘Many professionals and other skilled workers chose to leave the industry and quite simply have not returned or been replaced. A real focus on attracting more young people into the industry is critical alongside an expansion of apprenticeship opportunities,’ he added. Continue reading
Sharp upturn in UK home owners using equity release
Equity release lending in the UK has seen its biggest rise for 11 years with levels up by £68.3 million in the third quarter of 2015 compared with the previous quarter. The Equity Release Council, which issued the figures, says that it is clear that more and more home owners over the age of 55 are making use of their housing wealth to support their finances in later life. The third quarter saw the highest annual growth rates so far in 2015 and the number of new plans exceeded 6,000 for the first time since the fourth quarter of 2008, meaning that people are withdrawing a record £5 million of housing wealth every day. Total lending in the third quarter rose 21% year on year, compared with 18% annual growth in the second quarter and just 3% in the first quarter, to reach £452.6 million. In doing so, it set a new lending record for a second successive quarter. There were 6,049 new plans taken out in Q3 2015, representing a 12% increase on the second quarter and the volume of new plans was up 9% year on year, the strongest figure of 2015 to date, compared with 3% annual growth in the second quarter and 2% in the first quarter. Growing demand for equity release to help boost retirement incomes and meet later life expenses means lending for the first three quarters of 2015 already exceeds the 2013 annual total at £1.16 billion compared to £1.07 billion, and is within £220 million of the record annual total of 2014 which was £1.38 billion. The data also shows that lending via drawdown lifetime mortgages reached a new high in the third quarter, rising 18% year on year from £231.6 million in quarter two of 2015 to £266.8 million. The Equity Release Council said that drawdown products have become increasingly popular since their introduction in the mid-2000s as equity release customers took advantage of the opportunity to boost their income with regular instalments. The value of lending via lump sum lifetime mortgages also increased by 18% year on year in to reach £183.5 million, the largest figure since the fourth quarter of 2006 when it was £204.7 million. Lump sum mortgages can prove popular for customers who have a larger one-off cost to cover, such as clearing an outstanding mortgage or making home improvements. Despite accounting for less than 1% of the total market, lending via home reversions almost tripled from £632,647 in the second quarter of 2015 to £2.37 million in the third quarter. ‘Appetite among over 55 home owners for tapping into their housing wealth continues to grow. There is increasing awareness that equity release can offer many benefits in later life by providing people with extra income or the means to meet other costs and expenses,’ said Nigel Waterson, chairman of the… Continue reading
Sales rise in Hong Kong residential market
Residential property sales in Hong Kong have increased, up 9.4% from August to September but officials are keeping tax policies in place to try to keep price growth under control. First hand transactions jumped 110%, while secondary sales declined 15%, month on month, according to the latest data from the Land Registry. Both demand and supply remained robust in the primary market, with around 360 units launched during the mid-autumn festival holiday, says the latest monthly Hong Kong property market report from international real estate firm Knight Frank. For example, 110 units in Century Link in Tung Chung and over 200 flats in Upper East in Hung Hom were snapped up within just a few hours. In contrast, the secondary market remained subdued last month, amid the recent stock market volatility, a potential interest rate rise in the United States and fierce competition from primary developments, the report points out. It also points out that the Chief Executive has announced that the stamp duty policies will remain in place in the near term. ‘We do not expect home prices to drop significantly,’ the report adds. Calculations by Knight Frank indicate that a 100-bps increase in mortgage rates will only result in a HK$500 increment in monthly instalment for every HK$1 million of mortgage loan, based on a 20 year repayment period. ‘Therefore, a minor interest rate hike is not expected to lead to a significant default risk. On the other hand, market views do not expect a drastic interest rate hike this year,’ it adds. Despite strong leasing demand, the Grade-A office market was stable last month amid limited available space, particularly in core business areas, the report also says. Most firms opted for renewing their leases rather than relocation due to a lack of alternatives. The key demand drivers remained Mainland Chinese firms, which continued to favour Central for setting up offices. As a result, Central’s vacancy rate dropped a further 0.2% point to an extremely low level of 1.4% in September, close to the historical low in 2008. An increasing trend of operation split was witnessed in the office market due to a lack of vacant space. Many firms have to split their operations into smaller offices located in different buildings. Previously, only major firms requiring large premises needed to split their offices, but now even firms requiring units of below 10,000 square feet are going for such arrangement. ‘With the tight supply and many offices under multiple offers, landlords have become more aggressive in asking rents. If the trend continues, it could be possible to see a reversed premium situation next year, firms requiring large office space have to pay an even higher per square foot rental,’ the report explains. ‘Looking ahead, given sustained demand and low vacancy rates, we remain positive towards the long term outlook for Grade-A offices in Hong Kong. We expect rents in Central to increase 10% this year and another 5% in 2016. In Kowloon… Continue reading
