The CPA says that growth will rise at same rate as economy but will be held back by cooling housing market

The construction industry is set to experience sustained growth over the next three years, according to the latest forecasts from the Construction Products Association.

The CPA’s summer review predicts that growth in the sector will match that of the overall UK economy. However, the CPA says that an anticipated cooling the housing market together with poor delivery of planned investment by the water industry and the Highways Agency will constrain growth, particularly during 2008.

Key points in the Association’s forecasts include:

  • Public housing repair and maintenance output to recover over the next three years, but the government’s waning enthusiasm for upgrading all housing to decent homes standard by 2010 will limit progress
  • Sustained recovery in office development, together with the Olympics workload, will underpin commercial sector growth
  • Increased investment in regional distributional facilities will help lift industrial building work during 2007
  • Modest recovery in health related output after two years of sharp decline
  • Private new housing and RM&I output will be dampened during 2007 and 2008 due to higher interest rates, greater consumer caution and a cooling in the general housing market
  • Revisions to Highway Agency schemes will continue to depress road construction activity during 2007 and 2008.

After four years of decline, lower road construction activity and a weaker than previously anticipated pick-up in water industry investment will limit infrastructure growth to 1% per annum during 2007 and 2008.

Allan Wilen, CPA economics director, said: “After two lean years, industry growth is expected to quicken and to be more broadly based. However, this growth will not be uniform across all sectors.”