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Recent public spending has prompted significant regeneration in the North-east, and in no sector has this been more evident than residential development.

Work started on 9% more new dwellings in the North-east in December 2003 compared with the same period in 2002. Considering that the 2001 census showed that population figures have stayed roughly the same for the past decade, it seems public sector spending has been the main factor contributing to the significant growth in the region's housing market.

Government investment in local authorities and housing associations has created a lot of opportunities for private contractors to get into bed with the public sector. Indeed, contractors Mears, Connaught and Frank Haslam Milan & Co have all created specialist divisions to carry out social housing refurbishments and new-builds.

Major projects currently underway in the North-east include the £1.1bn Sunderland Arc redevelopment on the banks of the River Wear, established in May 2002 to fulfill a government initiative to promote urban regeneration, refurbishment of Blyth Valley council's housing stock, new-build schools in Newcastle, the new-build South Tees Hospital and the £180m second Tyne Tunnel.

One huge project is the £850m Newcastle Great Park, a housing project managed by Taylor Woodrow and Persimmon. The consortium has invested more than £10m in on-site infrastructure, including spine roads and services to a new business park and the town itself.

Some work has been carried out to improve access to project and the wider area, but further work has yet to be agreed with the relevant highways authorities.

With so many major projects, it is unsurprising that construction professionals and tradesmen are in high demand in the North-east. Site managers with the right experience are particularly sought-after. David Hutton, manager of Hays Montrose Newcastle says: "There isn't much oversupply and anyone with decent experience (three to five years) is very placeable at the moment. A lot of our clients tend to look for the ideal candidate – a 28- to 32-year-old with five years' experience on all types of projects who is willing to move about and doesn't want too much money. However, firms that are prepared to be flexible with their requirements are more likely to have success."

Non-housing projects in particular are being held up by a lack of candidates with relevant experience. Hutton says: "In line with the increases in public spending, there is also a real shortage of design engineers with experience in highways and transportation, as well as healthcare and public buildings professionals."

Salaries are generally increasing, with a premium being paid for applicants with the right experience. "Some companies are upping their benefits by offering healthcare, pension schemes, options on cars, better holidays and working hours," explains Hutton. "Others tend to offer a higher salary, putting the onus on the applicant to provide for themselves. There isn't really a governing rule but there is certainly greater flexibility with improving salaries and packages."

Contractors should expect a significant increase in workload due to the increased public sector spending in the North-east. The recent focus on public sector work by the private sector, overall regeneration in the area and a buoyant construction industry will all contribute to construction growth in the coming years.