CPA: Construction output to slow down, but no recession

Construction output in 2008 is expected to grow by just over 1% compared with 2.6% in 2007, according to the latest forecast by the Construction Products Association (CPA).

The key elements of the forecast are:

• Housing starts are expected to fall to 205,000 in 2008, but recover to 235,000 by 2012
• Output on commercial projects is expected to reach a peak in 2009 with output of £17.3bn, but fall back to £15.5bn by 2012
• Output on infrastructure projects, which has declined sharply over the past decade, is expected to recover strongly over the next five years with output increasing by over 25% from just under £5bn in 2007 to more than £6.5bn in 2012
• The repair and maintenance market is expected  to remain subdued throughout the forecast period, with some recovery in the private sector after 2010, offset by falls in programmes of repair and improvement for the social housing stock
• Output on public sector projects is expected to grow by 2.8% per annum over the next five years, more than double the rate of growth in the private sector, which is forecast to grow at just 0.3% per annum.

CPA chief exectutive Michael Ankers commented: "What we are seeing is a fall in private housing - both new build and repair and maintenance - over the next couple of years, balanced by continued growth in the commercial sector on the back of major schemes that are already underway.

"The industry will also be supported by increasing government investment in its schools' programme, a modest recovery in spending on infrastructure projects and the start of the major projects associated with the Olympic Games and the Stratford City Development. As a result, construction output is expected to grow by around 1% in both 2008 and 2009."

The CPA suggests that looking ahead to 2010-12, the commercial sector will decline as more space becomes available following major investment in previous years. The decline should be balanced by a recovery in the housing market and the start of large infrastructure schemes such as Crossrail and the M25 widening scheme.