The construction industry will grow 23% by the end of 2018 and contribute £12 billion to the UK economy over the next two years alone, according to the Construction Products Association (CPA) Autumn Forecasts, which were released today.
In the short-term, the CPA has forecast that construction output will have grown 4.8% by the end of 2014, and a further 5.3% in 2015. Private housing starts, meanwhile, are expected to grow 18% in 2014 and 10% in 2015.
Dr Noble Francis, economics director of the Association, 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. Recovery is not a foregone conclusion however, and 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."
Dr Francis said the rapid growth of the private housing sector has been caused by consistent levels of demand, the general UK economy's return to health, and government policies such as Help to Buy. He cautioned, however, that serious questions remain over the affordability of housing and higher mortgage repayment costs.
"Commercial, the largest sector, is expected to benefit from a pickup in consumer spending and business investment and drive growth in each year up to 2018," he added. "Output in the sector is forecast to reach £26.8 billion in 2018, but this remains 16.6% lower than the pre-recession peak in 2008."
Turning his attention to infrastructure, Dr Francis said output in this sector is forecast to rise by 8.2% per year, on average, over the next four years. "Roads construction is forecast to increase by 10.0% in 2014, and a further 5.0% in 2015, due to growth in the Highways Agency’s capital funding," he said. "Rail output is forecast to rise 8.0% in 2014 and 2015, but from 2016, growth is anticipated to slow, reflecting uncertainty regarding funding."
Dr Francis concluded: "The Association's central forecast estimates that construction output will rise 4.8% in 2014, a marginal change from the previous 4.7% estimate. Output is forecast to rise a further 5.3% in 2015, an upward revision from 4.8% growth in the Association’s Summer Forecast due to the continued strength of the UK economy."