Growth in private house building, infrastructure work and commercial activity will drive recovery in the construction industry over the next four years, according to the latest forecast from the Construction Products Association (CPA).
The report says that construction output is expected to rise by 3.4% in 2014 and by a further 5.2% in 2015. Growth is projected to continue throughout the forecast period, to 2017. However, considerable uncertainties remain regarding the long-term sustainability of the recovery in the industry and wider economy in the latter years of the forecast, post-2015.
Private housing repair, maintenance and improvement is expected to grow by 3.5% in 2014 and then 4.0% per year until 2017.
Meanwhile, public housing starts are predicted to rise 2.0% in 2014 and 2015 before marginal growth thereafter with the Government focusing on affordable, not social, housing provision.
CPA economics director, Dr Noble Francis, said: 'The construction industry is in a very different place to just one year earlier, when output fell to a level 15.4% below its pre-recession peak. Since 2013 Q1, activity has picked up considerably. Initially this was due to a rapid expansion in house building but more recently growth in new infrastructure and a recovery in London commercial activity have supplemented further rises in private housing.'
He continued: 'Private housing has seen a rapid recovery, albeit from levels of house building that are half the number needed to meet the number of households created. This private housing growth has been driven by wider economic recovery and government's Help to Buy policy. While initial concerns were that this policy would fuel house price inflation, but clearly both house prices and house building have risen significantly. Housing starts in Great Britain during 2013 are estimated to have increased 24.0% and further growth rates of 16.0% in 2014 and 10.0% in 2015 are forecast.'
Dr Francis said: 'Output in the largest construction sector, private commercial, fell 33.1% between 2008 and 2012. In 2013, however, major office projects in London have proved sizeable enough to start a recovery in the sector. The sector is expected to grow 2.7% in 2014 following growth of 2.4% in 2013. From 2015, wider economic recovery and a rise in demand for prime office and retail space outside of London and the South East should also boost the sector.'
He concluded: 'The largest constraint to industry recovery continues to be public sector construction. Public non-housing output fell 27.2% between 2010 and 2012 and the sector is not anticipated to recover until the impacts of capital investment growth feed through in 2015.'
