A continuing increase in new housing and infrastructure development in Northern Ireland is putting strain on the construction supply chain, according to a new report.

The RICS & Tughans NI Construction and Infrastructure Monitor for Q2 2021 found a strong growth in total workloads (+24%), while also reporting problems around the cost of materials and shortage of staff to deliver projects.

Growth in private residential sector construction continued to be particularly strong, with +44% (net balance) of NI respondents reporting an increase in activity (up from +29% in the previous quarter and the strongest reading in the last five years). Meanwhile NI infrastructure works also saw a big bump, with a net balance of +83% reporting an increase (up from +50% in the previous quarter).

Jim Sammon, RICS NI Construction spokesman commented: "With skills shortages pushing up wages and material shortages also leading to increased costs, it's perhaps no surprise that NI respondents expect profit margins to continue to be squeezed over the next year. But it is encouraging that workloads have continued to grow and expectations are for ongoing growth, albeit that workload expansion in Northern Ireland is being reported at a lower levels than elsewhere in the UK."

-- Advertisement --

While respondents indicated the construction sector is now broadly recovering well from the COVID-19 pandemic, constraints on the market's return to normality were also becoming apparent.

82% of respondents pointed to a shortage of materials hampering the market during Q2, up from 57% previously. Moreover, the cost of materials is expected to increase by nearly 10% over the next twelve months, with these projections running ahead of the 7% growth anticipated for tender prices.  

The Q2 survey also picked up concerns around labour shortages – both for skilled labour and 'white-collar' roles. A net balance of +64% of NI respondents said a lack of quantity surveyors will limit new activity (up from +50% in the previous quarter). There were also increasing skills shortages reported for other construction professionals and for trades such as bricklayers.

Looking over the next year, respondents predict construction workloads will continue to tick up, with a net balance of +13% of NI respondents saying more activity is expected.

Michael McCord, Senior Partner at Tughans, added: "With the demand that there has been for housing, it is not a surprise that house building activity is recording strong growth. Perhaps even more significantly for the economy is the strong growth in infrastructure activity. Investment in infrastructure will support the recovery and enhance Northern Ireland's competitiveness for the longer-term."