Uncertainty hinders prospects
The Construction Products Association’s (CPA) Autumn Forecasts for construction output growth in 2020 and 2021 have been downgraded from 1.0% and 1.4% to 0.5% and 0.9% respectively from its summer forecasts.
The downgrade reflects uncertainty around Brexit and major infrastructure delivery, most notably delays and cost overruns with Hinkley Point C and the Review into HS2. Slowing house price growth and Brexit uncertainty impacting investment in the commercial sector have also contributed to this more pessimistic projection.
In the private housing sector, starts are forecast to fall 2.0% this year given slowing house price growth and weaker demand in southern regions of the country, before returning to growth in 2020 as the economy settles and underlying demand for new build house purchases is enabled by Help to Buy.
The public housing sector’s prospects are more positive due to grant funding on the Shared Ownership and Affordable Homes Programme, although there are signs of vulnerability as housing association development is increasingly linked to the slowdown in the general housing market.