Following two strong years for the industry, the Construction Products Association (CPA) has predicted construction output to fall by 4.7% in 2023 before a slow recovery in 2024.
The CPA’s winter forecast predicts next year’s growth to be just 0.6%, largely due to the UK recession, increasing interest rates, and inflation. The two worst sectors to be affected are private housing new builds, and repair, maintenance, and improvement (RMI). New build housing remains the largest sector within the industry, with infrastructure second, and RMI third. However, double-digit cost inflation is expected to impact activity within the infrastructure sector, reducing its immunity to the current financial climate.
The housing market is forecast to have a soft landing, with a sharp decline in demand in Q1 of 2023 following on from a fall during Q4 of 2022. The report anticipates a recovery in Spring due to lower mortgage rates, but private housing output is expected to decline by 11% as housebuilders roll back on starting new developments.
Poor consumer confidence and a fall in real wages combined with construction cost inflation in impacting the RMI sector. Following the working from home and ‘race for space’ demands created by the pandemic, homeowners have been delaying smaller improvement works. The beginning of pre-budgeted large improvement works continued through 2022, but this demand is expected to drop with the overall RMI sector seeing a fall of 9% in 2023. Slow growth of 1% is forecast for 2024.
For further information on the CPA, please visit https://www.constructionproducts.org.uk
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