Total construction output increased by 8% in 2017 compared with 2016, to reach a total value of £163.5bn. In terms of value, new work accounts for the largest share, with output growth having been particularly strong in the residential new work segment, which saw growth of 14% in the year.
Predicted growth in the new-build sector is set against lower growth levels for completions, and also takes into account an element of materials inflation — in particular for the finishing of new housing, such as sanitaryware, tiles and electrical wiring products. RMI in the residential sector is currently forecast to remain relatively steady, with low annual growth rates reflecting consumer confidence levels.
In H1 2018, the overall construction sector remains uncertain to moderately optimistic. Indications are that new orders remained positive into Q4 2017 and this should lead to some growth in terms of output into 2018 and beyond for certain key sub-sectors, and as a result, the outlook for the UK construction market remains mildly positive into the medium-term, although with lower rates of overall growth than previously forecast.
The outlook for the housing sector remains positive, if modest, with 17% overall growth in residential output currently forecast between 2017 and 2022. The imbalance between demand and supply for new housing will remain one of the key drivers for continued output growth for the residential sector, and the number of new programmes designed to address shortage in housing stocks should motivate output into the medium-term.
Jane Tarver of AMA Research said: “Overall growth in construction output is forecast to reduce to around 2% for 2017-18, but improving to 3% for 2019-22. This more modest forecast takes into account the continuing uncertainty surrounding the Brexit process affecting the timing of business investment decisions.”
The ‘Construction and Housing Forecast Bulletin – GB 2018-2022’ is published four times a year by AMA Research. The bulletin provides analysis of the overall construction market in current prices, in terms of new work and RMI activity, also public and private sectors and new orders, housing starts and completions, as well as forecasts to 2022.