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The latest forecasts from the Construction Products Association (CPA) highlights that the construction industry recovery is becoming stronger and broader and that the industry is on track to grow 18% by 2017.

Construction output is expected to rise by 4.5% in 2014 and by a further 4.8% in 2015; Private housing starts are set to rise 18.0% in 2014 and 10.0% in 2015; Commercial offices construction is expected to increase 7.0% in 2014 and 10.0% in 2015; and Infrastructure activity is set to rise 10.1% in 2014 and 7.2% in 2015.

The lack of Green Deal and ECO-related work has been a considerable constraint. 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.

Dr Noble Francis, Economics Director of the CPA, commented:  “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.

“We expect private housing starts to surge 18.0% in 2014 and 10.0% next year before falling to 5.0% in 2016 and 2017.  The government’s Budget 2014 extension of the Help to Buy scheme, in addition to a strengthening UK economy, will lend the necessary confidence to house builders to boost supply.

“We hasten to add, however, that housing starts are only half the number needed to meet the number of households created.  As a consequence, when this inadequate supply is combined with excess demand and general expectations of house price inflation, we expect the key issue facing the sector in the medium-term will be affordability.

“It’s important to note that private house building only accounts for 15% of total construction.  Commercial, the largest sector, is expected to grow each year up to 2017.  The offices sub-sector in particular has recently shown growth, though demand is mostly in Central London.  We forecast offices construction to increase 7.0% in 2014 and 10.0% in 2015.”

Dr Francis concluded:  “The main risks to our forecasts arise around the issue of energy.  Construction and manufacturing firms have serious concerns regarding energy security and supply.  Constant delays to the nuclear programme and uncertainty regarding investment in gas-fired power stations only exacerbate these concerns.  As a consequence, we continue to highlight the need for government to deliver on its numerous announcements of project investments and ensure these feed through into activity on the ground.”

Other key points in the Forecasts include:

  • Public housing starts are set to rise 8.0% in 2014 and 5.0% in 2015 as growth in private housing leads to increases in public housing via Section 106 agreements;
  • Public sector construction is forecast to marginally rise 0.7% in 2014 and 2.3% in 2015 as delayed schools and hospitals projects start on site;
  • Retail sub-sector output growth of 4.0% is forecast in 2014 and 8.0% in 2015;
  • The Industrial sector – primarily factories and warehouses – is expected to grow each year to 2017;
  • Energy infrastructure output growth is set to slow from 15.0% in 2014 to only 5.0% in 2015.