The Construction Products Association is predicting construction output growth of 3.0% in 2016 and 3.6% in 2017 – fuelled by a strong performance from private housing – leading to growth of 15.4% in output by 2019.
However, whilst the forecasts for construction are still optimistic, they represent a downward revision from the 3.6% growth forecast for 2016 in the CPA’s Winter forecast and the 4.0% growth in the Spring forecast published a year ago. This revision reflects the increasing risks to the forecast due to concerns regarding the strength of UK economic growth and the impacts of uncertainty prior to the EU referendum in June.
Housing, especially home ownership, is a key issue for all major political parties and there is currently a raft of policies from government available to underpin housing demand. This, in turn, sustains house price inflation and incentivises major house builders to increase supply in the near-term. In the general housing market, prices are expected to continue to rise in 2016 and 2017, especially in key areas of demand such as London and the South East.
As a result, private housing starts in the sector are expected to rise 5.0% in 2016 and a further 5.0% in 2017. However, prices in the niche that covers residential in prime areas of Central London are expected to fall in 2016 and 2017 due to an oversupply, which is only expected to be exacerbated as more large high-end properties come online in the next 12-18 months.
Growth in the commercial sector is forecast to average 3.2% per year to 2019. Near-term prospects are expected to be driven primarily by offices construction whilst retail activity falls. New offices construction is expected to grow 7.0% in 2016 and a further 6.0% in 2017 due to major high profile developments currently in the pipeline in London, Birmingham and Manchester.
Via TRADA. View full article here.