Construction output will grow in every year to 2017, according to our latest Forecasts. Following growth of 1.1% in 2013, the recovery is expected to strengthen in 2014, largely on account of growth in infrastructure and commercial adding to the momentum generated last year by private housing.
The combined impact of the economic recovery and Help to Buy spurred a recovery in private housing in 2013 and starts increased by 20.9%. This rebound in private housing activity was the main driver of the initial recovery in construction. Now that HM Treasury have confirmed that Help to Buy part 1 will remain in place until 2020 and continued economic growth is likely, despite increasing house prices, private housing should provide a low risk source growth over the medium-term. In 2012 private starts totalled 94,033; by 2017 starts are expected to reach 162,000.
The largest construction sector – Commercial – reached its nadir in 2013 after declining by 12.7% in 2012. A recovery in the London offices market should drive a recovery of around 2.5% in 2014, and thereafter, as recoveries in business investment and consumer expenditure become broader and better established, higher rates of growth should occur. To 2017, the sub-sector is set to add around £4.0 billion to annual output.
Industrial output declined by 7.6% in 2013, but a recovery to 2017 is anticipated. By 2017, output is forecast to reach £4.2 billion; £1.0 billion higher than in 2013, but still one-third lower than the 2006 peak. Growth this year should come from increases in factories and warehouses output.
Other points from the forecast include:
- Public housing starts are set to rise 8.0% in 2014 and 5.0% in 2015;
- Public sector construction is forecast to marginally rise by 0.7% in 2014 and 2.3% in 2015;
- Infrastructure to rise 10.1% in 2014 and 7.2% in 2015;
- Energy infrastructure to slow from 15.0% in 2014 to only 5.0% in 2015.
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By Kallum Pickering at 16 Apr 2014, 15:47 PM