The forecasts by the Construction Products Association (CPA) suggest that the growth to 2019 within the construction industry, will be primarily driven by a 28% increase in infrastructure activity and a 6.1% increase in private house building. They expect that this growth will offset the expected falls in commercial and industrial construction.
Construction output is expected to grow by 0.8% in 2017, 0.7% in 2018 and 2.2% in 2019.
Noble Francis, economics director at the CPA, said: 'Near-term prospects for construction appear bright with industry growth boosted by several new billion-pound infrastructure projects across the country. A rise in infrastructure output is expected to ensure positive growth for the construction industry overall, if the Government can ensure it delivers on its announcements.'
House building is expected to remain a key source of output growth, with private house building starts rising at 2.0% per year between 2017 and 2019.
'Construction industry prospects should also be boosted by a positive outlook from major house builders, who appear willing to increase supply as they take advantage of rising house prices in an undersupplied market,' said Mr Francis.
'The exception to this is the high-profile niche of prime residential in Central London, where there is already an oversupply of properties and sharply falling prices.'
Despite the positive forecasts for infrastructure and house building, the CPA warns that substantial risks to construction growth remain, as the fall in the value of Sterling is leading to increased import and raw materials costs.
On the demand side, whilst the uncertainty post-Referendum has not impacted activity on site as yet, it appears to be affecting areas that require high upfront investment for a long-term rate of return, such as commercial offices and industrial factories.
"Despite these concerns, infrastructure and private housing are anticipated to ensure that the construction industry grows between 2017 and 2019, providing an extra £5.3 billion of economic activity for the construction industry and wider UK economy."
