Against the background of a booming property market, it is surprising that new work construction output in London increased by just 1 per cent in 2013.
Underlying this was a reported weakness in the key commercial building market and a 10 per cent drop in infrastructure work. These negative forces were largely offset by growth in both the public and private housing sectors.
However, overall growth is expected to strengthen over 2014, largely as the result of a near 30 per cent increase in private housing output, alongside modest growth in commercial building.
New work output growth is expected to be moderate over 2015 and 2016, although by the end of 2016 the value of new work construction output will be 12 per cent higher than in 2013 – a rise of £1.9bn.
Private housing remains the market most at risk. Whenever a mood of excitement, based on seemingly unique events, pervades a market, it is time to start planning for the turning point.
Recent data show a slowdown in the sale of higher-priced houses, while in the letting market demand has weakened recently.
In short, sustained growth in private housing is not expected. Meanwhile, in another key market, infrastructure, output is forecast to weaken again in 2014/15 as work on large projects winds down.