Residential 'helps drive construction boom'
Residential projects are expected to contribute to a large expansion of the construction sector in the next two years.The Construction Products Association (CPA) forecasts ten per cent growth in construction during the period and predicts it will contribute £10 billion to the UK economy.In 2014, output is expected to grow by 4.7 per cent, followed by an increase of 4.8 per cent the next year. Over the next five years, the sector is forecast to expand by 22.2 per cent.Private housing is set to contribute significantly to this robust growth, with new starts expected to grow 18 per cent in 2014 and ten per cent in 2015.However, CPA economics director Noble Francis stated that it is by no means certain these rates will be sustained."The pending general election … will cast the future of housing policies into doubt. Such uncertainty, together with questions about affordability and higher mortgage repayment costs, will likely subdue private housing growth to five per cent per year from 2016," he said.Dr Francis also warned that house price inflation could lead to the imposition of lending restraints and this could have a knock-on effect on housebuilding by reducing effective demand and dampening growth.Commercial construction is forecast to make the biggest contribution to the construction expansion, according to the CPA. It is set to increase by 23.4 per cent to 2018.London has witnessed the strongest growth in the office sub-sector, which is the largest driver of commercial expansion. However, activity in regional markets is set to pick up in the coming years, and increased demand and rising rents in several major cities could lead to new offices output from 2015.Infrastructure output is also predicted to increase - it is set to rise 9.2 per cent in 2014 and seven per cent in 2015. Crossrail and nuclear decommissioning projects are likely to have a particularly big impact on the sector, the CPA said.
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