Construction is forecast to grow by 18% over the next three years with growth of 18% this year alone in housebuilding and strong growth also being seen in infrastructure and commercial building.
The latest forecast from the Construction Products Association (CPA) says overall industry growth of 4.5% can be expected this year followed by 4.8% next year and 4.3% in 2016.
The surge in house building, which accounts for some 15% of industry work, will not persist at this year’s levels, but growth is to remain strong with 10% growth in private house building next year and 5% in 2016 and 2017.
The largest single sector is commercial building which is being driven by office building in central London. Office building is forecast to rise 7% this year and 10% in 2015.
An increasingly strong infrastructure sector will be a feature of the next few years, with 42% growth from last year’s levels by 2017; thousands of engineering jobs will be created as a result. The fastest growing sector will be rail where Network Rail has a £38Bn, five year investment programme under way.
Road investment is forecast to grow each year after collapsing in recent years, with a 15% rise this year
CPA Economics Director Dr Noble Francis said: “One year since the construction recovery began, activity is becoming firmly entrenched. We forecast 4.5% growth in 2014 and a further rise of 4.8% in 2015. The construction industry is now on track to grow 18% by 2017 and contribute an additional £20 billion to the UK economy.”
The CPA says the Budget extension of the Help to Buy scheme and a strengthening economy will give housebuilders confidence to boost supply.
Dr Francis said the lack of Green Deal and ECO-related work has been a constraint on the housing market. “Given the £20 billion market potential for improving the energy efficiency of the existing UK housing stock, the forecast of only 3.5% growth in 2014 and a further 4.0% in 2015 will disappoint many industry observers,” he said.
CPA says the main risks to the forecasts stem from uncertainty over energy, with delays to the nuclear programme and uncertainty over investment in gas-fired power. Energy infrastructure output growth will slow from the 15% expected to be seen this year to 5% in 2015.
