The latest Gleeds Market Report has shown growing property and construction sector fears as Iran war fuels market volatility.

Global conflicts overtook interest rates and inflation as the primary threat to the industry this quarter, according to the report, with around two thirds of those questioned worried about commodity shortages and price hikes in the wake of the ongoing aggression.

Respondents warned of tightening supply chains, cost spikes and a deteriorating economic outlook, highlighting the damaging knock-on effects that the increase in oil prices will have, particularly for those engaged in plant and energy heavy trades.

Almost half of respondents said they had turned down a tender opportunity in Q1, signalling a reluctance to take on risk in an increasingly uncertain environment. A further 57% reported that contractors had become more risk averse, with many citing volatile input costs and concerns about a potential global downturn.

Andy Ellis, UK MD at Gleeds, said: “The conflict in Iran is already affecting construction costs and confidence, with the sector particularly vulnerable if prices continue to rise and we experience a slump in demand. Contractors are stepping back from risk, clients are seeing reduced appetite to tender, and the market is becoming more cautious. We expect to see greater use of fluctuation clauses and more defensive commercial strategies as volatility persists.”

The report also highlighted frustration with a lack of clear government direction, with 60% of respondents saying the chancellor’s spring statement failed to provide cause for optimism.

When asked what would help stimulate hiring, 22% pointed to reversing the rise in Employers’ National Insurance Contributions, while others called for increased investment in skills (21%) and better promotion of construction careers (34%).

Click here to read the latest Gleeds Market Report.