Housing in eye of construction’s ‘perfect storm’, warn analysts

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

Construction is set to endure a “perfect storm” over the next 18 months, according to analysts with a rise in private housing offset by a 23% fall in public housing this year.

The Construction Products Association (CPA) forecasts construction output to fall by almost 6% over the next two years, before a return to growth in 2014.

On housing, it’s a mixed picture, with the private market continuing to recover from its nadir in 2009 when housing starts fell to their lowest level since 1923. However there’s still a stark contrast between the fortunes of large and small with planning delays and challenges raising finance affecting the latter.

The CPA report says: “The largest builders’ completions in May rose 14% from a year ago. The large house builders are expected to continue to raise units, depending upon the success of NewBuy, and will be looking for margins of 10-15%.”

Overall, private starts are anticipated to rise 3% in 2012, says the CPA, before economic recovery boosts housebuilding by an average of 10% per year over the next four years.

The picture for public housing is grim, with the CPA forecasting that public housing starts are expected to fall 23% this year before falling a further 10% in 2013. Even after growth in the next three years, public housing starts in 2016 are still anticipated to be 35% lower than in 2010, it warns.

It says that although the housing minister is on track to meet the ‘target’ of 170,000 affordable homes over four years, this will primarily be achieved from the private sector.

The CPA report says: “Capital funding from the Department for Communities and Local Government (DCLG) is falling until 2014 and, as a consequence, social housing provision is also anticipated to fall sharply especially with government focus purely on affordable housing with social housing now rarely even mentioned.

“The latest data from the DCLG reported public housing starts in England during Q1 were 42% lower than a year earlier, adversely affected by the switch last year from the National Affordable Housing Programme to the Affordable Homes Programme. The Association forecasts that public housing starts are expected to fall 23% this year before falling a further 10% in 2013 and even after growth in the next three years, public housing starts in 2016 are still anticipated to be 35% lower than in 2010.”