Housing numbers to fall this year, says CPA

A decline in the amount of private housebuilding activity is expected this year, according to the latest forecasts from the Construction Products Association.

The CPA, which today issued its winter forecasts for the whole construction industry, predicts that private housing starts will drop 2% in 2020 after an estimated 8% fall in 2019.

It anticipates that this will lead to completions dropping by 1% to 155,658 this year, with the value of this work falling by the same amount to just over £35bn. However, it believes that housing numbers will stabilise in 2021.

The body said the limited certainty provided by the Conservatives’ general election victory would not make up for uncertainty over the UK’s ongoing trading relationship with the EU, which continues to make big investment decisions difficult.

Noble Francis, the CPA’s economics director, said the main issue weighing on construction activity generally was uncertainty, “which hinderes decision making, the signing of new contracts and new project starts on site”.

“While the short-term certainty provided by a majority in the general election does mean that a few more projects are likely to go ahead, further political and economic uncertainty beyond 31 December remains problematic for investment and activity. This is a particular issue in high value sectors such prime residential”.

In total, the forecast said more than £210bn of construction work is set to get under way over the next two years.

Around £41bn of new housing work is predicted for 2020, with £35bn coming from the private sector and £6bn from the public sector. This represents a slight contraction of 0.6% in new housing activity compared with 2019.

The commercial sector is expected to produce the most work outside housing, with £26bn of work forecast for this year. But this signals a 4.2% drop from the amount that hit the market last year and is the third year in a row that commercial workloads have fallen.

Public and private sector construction output

The CPA said there was still not enough long-term certainty for investment in the largest tower and mixed-use projects, despite the Conservatives winning a majority and parliament passing the EU withdrawal bill. Even if more long-term certainty was established, it would take time to filter through to the biggest projects, although some benefit would be seen sooner.

All construction work, including repair and maintenance, is expected to be worth £161bn this year, a 0.3% dip in output, before bouncing back by 1.2% to £163m.