Construction output forecast to grow significantly in 2021

Construction output forecast to grow significantly in 2021

10th August 2021

The latest Summer Forecast from the Construction Products Association (CPA) shows that construction output is on the rise in 2021 and set to increase further in 2022.

A 13.1% uplift in contraction starts in 2021 and will be followed by growth of 6.2% in 2022.

According to the CPA, this growth is being driven primarily by the infrastructure and housing segments, rather than commercial – and the trends across the latter two segments can be attributed in part to changes in behaviour due to the pandemic.

Growth in housing has, for example, been focused outside major cities, believed by the CPA to be due in part to the rise in remote working. Additionally, the Stamp Duty holiday and Help to Buy initiatives introduced by the Government have supported the increased construction activity in this area.

Likewise, the so called ‘Race for Space’, as homeowners seek to increase space within their homes for homeworking, has resulted in an uptick in repair, maintenance and improvement work on homes, with output up 19.3% from pre-COVID levels according to the Office of National Statistics.

Conversely, the pandemic has had a broadly negative impact on commercial construction – with reduced starts on significant central London towers, although this was mitigated at the beginning of the year by increased renovations of retail and leisure businesses preparing for reopening.

Infrastructure is strong through 2021 and 2022 thanks to major projects such as the nuclear power station Hinkley Point C, the Thames Tideway tunnel, and the High Speed 2 (HS2) rail project. Driven in part by these projects, infrastructure is forecast to rise 23.4% in 2021, with cost overruns and delays set to influence a further rise of 9.7% in 2022.

However, the CPA has pointed out that for some construction businesses – in particular SMEs, who constitute 86% of construction employment – these rises could result in a shortage of materials and skilled labour. Cost increases and extended lead times are possible as a result.

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