Latest predictions from the Construction Products Association say that the construction industry will grow 23% by the end of 2018, with private housing, private commercial, road construction and energy infrastructure output all expected to rise.
The Association’s Autumn Forecasts, released today, anticipate that over the next two years alone the industry will contribute £12Bn to the UK economy. Overall construction output is expected to grow 4.8% in 2014 and 5.3% in 2015.
Economics Director Dr Noble Francis said: “Our Forecasts reflect a welcome, recurring theme as growth continues and begins to broaden. Short term activity is still led by private housing, infrastructure and commercial, and areas of public sector construction are showing the first signs of increasing strength.
“We believe the expansion will continue through 2018.”
Private housing starts are forecasted to increase by 18% in 2014 and 10% in 2015. This growth is expected to dip to 5% per year from 2016 partly as a result of serious questions about affordability and higher mortgage repayment costs.
The private commercial sector is set to increase 3.7% in 2014 and 6.1% in 2015, including continued growth in both the offices and retail sub-sectors. Output is expected to reach £26.8Bn in 2018, however this would still be 16.6% lower than the pre recession peak in 2008.
Overall Infrastructure output is forecast to rise by 8.2% per year, on average, over the next four years. This is expected to see roads construction grow 46.1% by 2018 due to an increase in the Highways Agency’s capital funding.
In terms of energy infrastructure, forecasts predict growth of 10.0% in 2015 before work on Round 3 Offshore wind and Hinkley Point C leads to growth rates of 15.0% in 2016 and 2017 followed by 25.0% growth in 2018.
Public sector construction is anticipated to grow on average 2.6% per year between 2015 and 2018.
Despite overall optimism, Dr Francis pointed out that the recovery of the Industry is not a foregone conclusion. “Several important risks remain, primarily around the strength of the UK and Eurozone economies, the policy outcomes following the 2015 General Election and the impact of any supply constraints such as the scarcity of labour and materials,” he said.