Construction industry gloomy about the upcoming years
The marked drop in construction orders has cast a shadow over the spirits within the construction sector in Lower Saxony. This revelation came forward during a presentation on Tuesday in Hanover by the Lower Saxony Construction Industry Association (BVN). As per BVN President Christian Staub, small and medium-sized enterprises predominantly focusing on residential construction show widespread pessimism regarding the future.
In contrast to 2021, the sentiment among the 290 construction companies surveyed has significantly worsened. Two years ago, merely 4% of the companies rated their residential construction business situation as poor. However, this figure climbed up to a daunting 57% in this year's survey. The overall outlook shifted from positive to negative regarding the order situation as well. While 75% of the companies rated their order backlogs as adequate in 2021, only two-thirds of them considered their order backlogs as satisfactory this year, stating them as insufficient.
Most organizations are also anticipating lower or significantly decreased sales for the current year compared to the previous one. Staub advocated for the creation of tools to foster residential construction recovery, stating, "It is crucially important to develop mechanisms to stimulate residential construction again." Wächter, the Managing Director of the BVN, commented on the industry's future, saying, "The construction sector must endure the recession for a longer period." Relief was not expected until 2026. Financial incentives, such as a temporary or permanent reduction of land transfer tax, were proposed as potential solutions, according to Wächter.
To counteract the pessimistic outlook in the construction industry and boost residential construction, several initiatives are being considered:
- Remediation Acceleration Plan (RAP):
- Swift Remediation: The RAP aims to expedite the remediation of high-risk buildings with stringent deadlines and penalties for non-compliance[1].
- Identification of Unsafe Buildings: Advanced data assessments will be employed to detect all buildings with dangerous cladding, and a comprehensive building register will be established[1].
- Support for Residents: The objective is to safeguard residents from the financial consequences of remediation and enhance their experience throughout the process[1].
- Building Safety Act:
- Clearer Responsibility: The Act aims to establish clearer accountability for building safety, holding those responsible for safety concerns accountable[1].
- Government's Housing Targets:
- 1.5 Million New Homes: The UK government’s "Get Britain Building Again" program intends to construct 1.5 million new homes over five years, with 240,000 of these being social housing units[1][4].
- Brownfield Redevelopment and Greenbelt Land Release: The plan emphasizes prioritizing brownfield redevelopment and judicious greenbelt land release (referred to as grey belt), supporting New Towns and infrastructure improvements[1][4].
- Streamlined Planning System:
- Reducing Red Tape: The government aims to simplify decisions on critical infrastructure projects by reducing the planning system's red tape, which hinders progress[1].
- Environmental Obligations:
- New Fund for Environmental Compliance: The government is contemplating establishing a new fund to assist developers in meeting their environmental responsibilities, aiming to boost housebuilding[1].
- Support for New Towns and Infrastructure:
- Prioritizing Brownfield Sites: The revised National Planning Policy Framework will prioritize brownfield redevelopment, which can revitalize urban areas and reduce the need for greenbelt land[1][4].
These strategies aim to address the decline in construction orders and revitalize the residential construction sector by accelerating housebuilding, enhancing safety standards, and streamlining the planning process.
