Construction output is forecast to rise by 14 per cent in 2021 and 6.3 per cent next year, according to the Construction Products Association, CPA, summer forecast published this week.
Private housebuilding and infrastructure are expected to be key drivers of construction growth in this year and next, although the outlook for the commercial sector remains subdued.
CPA economics director Noble Francis said: “The key constraint to our forecasts remains the cost and availability of imported products and skilled labour.
“The sharp recovery for both UK construction, and in places such as the US, has led to sharp cost increases and extended lead times for some key products such as paints and varnishes, timber, roofing materials, copper and steel. This is of concern particularly for SMEs, which account for 86 per cent of construction employment.”
He said SMEs often purchase on the day at builders’ merchants unlike larger contractors and housebuilders can plan and buy in advance as they have a pipeline of work.
“This makes SMEs subject to greater issues if supply is limited or costs have risen significantly, particularly for firms working on fixed-price contracts,” said Mr Francis.
Major housebuilders continue to report demand in the housing market and house price inflation continues to be robust. The Nationwide Building Society’s index showed a year-on-year house price rise of 10.5 per cent in July with a month-on-month decrease of 0.5 per cent.
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