Construction Industry Struggles with Housing Recession, CPA Reports

Construction Industry Struggles with Housing Recession

The Construction Products Association (CPA) unveils alarming forecasts for the construction industry, predicting a 2.1% decline in 2024 due to setbacks in private housing newbuilds and repair, maintenance, and improvement (RM&I) sectors. This report highlights the critical impact of economic factors and supply chain disruptions on the construction industry’s largest sectors.

CPA’s Winter Forecasts: A Detailed Analysis

Private Housing Sector Under Pressure

The CPA’s report reveals a significant downturn in the private housing sector, the largest contributor to construction output. Key factors such as increased mortgage rates have led to a notable decline in market demand, with housebuilders experiencing a 25-35% drop. The lingering effect of high mortgage rates is projected to result in a further 4.0% decrease in private housing output in 2024.

2025: Anticipating a Modest Recovery

Looking ahead, the CPA forecasts a 2.0% increase in construction output in 2025, aligning with expected economic recovery and falling interest rates. However, the industry is not expected to reach its previous highs until at least the end of the decade, with a lack of government policy stimulus being a contributing factor.,

Downtrend in Private Housing RM&I

The report also notes a general downward trend in private housing RM&I, the second-largest construction sector. Factors like rising living costs and fewer property transactions have led to reduced spending on home improvements.

Infrastructure Sector: Ongoing Projects and Challenges

Despite minor declines, significant projects in the infrastructure sector such as HS2 Phase One and Hinkley Point C continue. However, financial constraints at the local council level and uncertainties in project deliverability present ongoing challenges.

Conclusion: The CPA’s winter forecasts highlight the urgent need for attention from industry stakeholders and government bodies to address these challenges. The report emphasizes the importance of policy intervention, particularly in infrastructure and housing, to stimulate growth and recovery in the construction sector.

Impact on Stakeholders and Related Sectors: This downturn affects a wide range of stakeholders, including housebuilders, suppliers, and consumers. The broader implications for the UK economy, especially the crucial housing sector, are significant. Related sectors like real estate, mortgage lending, and supply chain logistics also face repercussions from these trends.



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