Glenigan’s UK Construction Industry Forecast 2023-2025 published today suggests the construction industry will continue to struggle in the face of a challenging economic climate.
In particular it believes restrained private sector investment, a housing market slowdown, weak UK economic growth, and high interest rates, will continue to suppress sector activity for the remainder of the year.
Despite short-term woes, renewed construction growth is forecast for 2024 (8%) and 2025 (7%) as the prospect of a recovering economy and market certainty lifts consumer and business confidence, boosting the industry.
The report shows that private housing market activity fell sharply during first quarter 2023 as starts on-site softened thanks to economic uncertainty and inflated mortgage costs.
Retrenched starts have continued throughout the year alongside further increases to the base interest rate. Faced with a slowdown in housing market activity and low house prices, the development pipeline has also been constricted by developers opting to build out existing sites over new projects.
While weak private housing starts are expected to continue throughout the rest of 2023, with Glenigan forecasting a 23% decline, housing market conditions will gradually improve.
According to Glenigan, better household incomes may cause buyers to take advantage of reasonable house prices, helping to support a partial recovery during 2024 (4%) and 2025 (11%) as housebuilders respond to improved consumer confidence and strengthening property transactions.
