Dr Noble Francis, Economics Director of the Association, commented: "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."
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Dr Francis continued: "The private housing sector's rapid growth since early 2013 has been sustained by consistent levels of demand, the general UK economy’s return to health and government policies such as Help to Buy. We forecast starts to rise 18.0% in 2014 and 10.0% in 2015. In order for such projections to be met, however, increased capacity is necessary, particularly from SME house builders. In addition, there remain serious questions about affordability and higher mortgage repayment costs, together with uncertainty around the future of housing policies given the pending election. With this in mind, we forecast private housing growth will moderate in the longer term to 5.0% per year from 2016.
"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. 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."
(CD/MH)
