Despite the adverse implications faced in the current volatile economic climate caused by: Brexit, COVID, the Ukraine war, and increasing energy and oil prices due to inflation, it appears that construction output will continue to rise in the UK.
To date, the ONS (Office for National Statistics) data reveals positive stable growth since the pandemic, as construction output in May 2022 was 4.1% above pre-pandemic levels. From March to May 2022, the ONS saw 3% growth which was the largest increase since June 2021. New works in private commercial and private housing sub-sectors in May 2022 saw a 12.15% and 7.2% rise, as they were the main contributors to the growth within the construction market.
According to CPA (Construction Products Association) forecast, through their incorporation of historic ONS figures, construction output remains resilient. The report suggests that output will steadily increase by an expected 2.8% in 2022, 2.2% in 2023 and 2.9% in 2024.
The report also suggests that the increase in commercial construction offers optimism for the future as despite being hugely disrupted by COVID with a 22.2% decrease in 2020, it is estimated that there will be 5.2% rise in 2022, 2.8% in 2023 and 4.8% in 2024 in commercial output.
The following Construction sub-sectors are forecast to see the subsequent levels of growth according to the CPA report data:
- Output in terms of infrastructure is expected to rise 8.8% in 2022 and 4.6% in 2023.
- Private housing starts are projected to grow 1% in 2022 and 2023, before a 3% acceleration in 2024.
- Private housing completions are expected to increase 2% in 2022 and 2023 and a further 3% in 2024.
- The output of public housing is expected to rise 2% in 2022 and 2023.
- Public non-housing output, including schools and hospitals, has an estimate growth of 1.2% in 2022, 8.4% in 2023 and an additional 3.7% in 2024.
Despite the negative consequences that builders have faced, and continue to face, due to the rising prices triggered by inflation, major builders and contractors have been able to minimise the impact by planning in advance. By purchasing ahead of schedule these builders have been able to reduce the impact of inflation by shifting some of the weight onto, and distributing it between, their sub-contractors.
Overall, house prices continue to rise, as according to ONS they rose 12.8% from May 2021 to May 2022. Rising demand is further revealed by the increase in mortgage approvals which were 3% higher in February 2022 than pre-pandemic January 2020. This suggests that despite the rising house prices people are continuing to keep up with the market. The Bank of England estimated that UK households have accumulated £200bn of savings since the initial March 2020 lockdown. This implies that the Construction industry remains stable if consumer spending remains high because of established employment rates and consumers making the most of their savings in order to keep up with inflation.