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Housing fightback helps drive 2014 growth forecasts

Construction output is set to grow by more than 4 per cent this year as housing continues to gain strength, according to new Experian and Hewes & Associates forecasts.

Experian has slightly upgraded its forecasts from those published in the winter, with the expectation for construction output to now grow at 4.5 per cent this year and 4.7 per cent next year. Growth in output is then forecast to slow, to a 3 per cent rise in 2016.

Experian’s head of construction futures James Hastings said the main change to the forecasts is within housing, particularly on the public side, after noting the strength of new orders growth.

“It was perhaps a bit stronger than expected – we expected [orders for public housing] to tail off in Q4 but they were at the same high levels as Q2 and Q3. We believe this signals that social housing providers have been successful in securing finance from elsewhere [other than the public purse].”

The firm’s private housing forecasts remain unchanged from winter save a slight upgrade to 2016, to 5 per cent growth in acknowledgement of the announcement in the 2014.  

Mr Hastings said that Experian’s 10 per cent growth forecast for infrastructure this year was “largely predicated on Hinkley Point C’s main works starting in the second half of the year”. The roads sub-sector is also set for solid growth over the forecast period to 2016, he added, owing to the pipeline of major works nationally.

Infrastructure is then forecast to grow by 9 per cent in 2015 and 3 per cent in 2016.

Meanwhile Hewes & Associates forecasts construction output volume to rise by 4.2 per cent this year, before slowing in growth to 0.8 per cent in 2015 and 0.4 per cent in 2016.

Private housing has a strong 13 per cent growth forecast for this year, while public housing is expected to see a 6.8 per cent uplift, before slowing to 3.2 per cent next and 2.4 per cent in 2016.

Hewes & Associates founder Martin Hewes said he did not expect the housing sector to keep growing at the strong rates we have seen.

In contrast to Experian, the Hewes & Associates forecast does not account for Hinkley works starting before the end of 2016. “We still don’t think work on Hinkley will start until much later on,” Mr Hewes said, with the forecast for infrastructure at 2.4 per cent growth in 2014 and 1.2 per cent in 2015.

“Electricity and roads are both forecast to grow by around nine to 10 per cent over,” he added.

He is less optimistic about the commercial sector’s prospects, with the sector forecast to decline by 0.8 per cent in 2015, though offices is still set for growth, though largely in London. “We looked at offices outside London – while there is a decline in good quality space, the confidence and developer interest isn’t quite there,” he said.

Earlier this week, the Construction Products Association upgraded its forecast for output growth to 4.5 per cent in 2014, up from 3.4 per cent when it published its previous forecasts in January.

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