Profit expecations in the construction industry are at a five-year high according to a RICS survey.

Profit expectations for the construction industry are at their highest levels for five years despite higher interest rates and rising material costs, an industry survey claimed this week.

The Royal Institute of Chartered Surveyors market survey revealed that construction was expanding capacity partly in response to a strong demand for commercial buildings.

RICS economist Ryan Emmett said that Investors could not get enough of commercial property at the moment. He said: “It is seen as a safe haven for their money compared to other assets such as equities.”

Emmett added that strong investment demand is insulating the construction industry from telling factors like rising oil and steel prices.

Over the last quarter of 2004 21% more chartered surveyors reported rises in construction work than falls. Workloads increased sharply in Northern England, and were at a five-year high in Northern Ireland.

In London/South East and the Midlands growth was moderate, with the commercial showing the most signs of activity. In Wales and Scotland growth was modest, while the South West saw the only fall in any sector with a sharp drop in private housing building.

The survey reported a rebound in the public sector and private housing sector in the fourth quarter of 2004 following a stagnant period of growth in Q3.

RICS said that the improving economy was expected to increase the demand for workers, and in the fourth quarter 35% more surveyors expect employment levels to rise than fall in the next three months.

Some surveyors had commented that an impending general election could cause uncertainty over the status of public sector projects, although RICS noted that the government had indicated a strong year ahead for investment.

  • The average price of a new home fell by 0.9% to £266,380 last month according to data from The survey said the slowdown had returned prices to levels seen at the start of 2004, but the stabilisation of prices over the last few of months indicated that some confidence had returned to the market. David Bexon, chief executive of SmartNewHomes, said that the continuing shortage of housing supply would minimise any price decreases and he predicted that the new homes market would grow between 2 and 4% in 2005.

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