Based on shop decorations, it’s basically Christmas (?!) and we are heading towards year-end, so what should we expect from the construction industry in 2023?
The Autumn Construction Forecasts for 2022-2024 have just been released by the Construction Product’s Association (CPA), and they are projecting a ‘significant’ decline in output of 3.9% in 2023 following what has been a 2% rise in 2022.
The projection is based on things you would expect, such as the continued fallout from the governments reversed ‘mini-budget’, what is considered to be the current global economic recession, increasing inflation and resulting fall in ‘real wages’, and the increasing interest rates which are making properties less affordable, and some small to medium sized builders weary of starting projects for fear they may be unable to sell the completed units.
On the plus side, people will always need housing, and there remains a large housing shortfall in the UK. The private housing sector is the largest in the construction industry and worth approximately £37b per annum. Most of the major house builders in the UK remain active and actively building, but without a sharp improvement in the general economic landscape, it is likely that most builders will revise their 2023 building targets down. That said, the forecasts are also projecting a 1% output increase in 2024 in the residential sector.
Looking at the market as a whole, the outlook is uncertain and projections are simply that. There are numerous moving parts within the UK economy, and currently globally which have a direct impact on the UK markets. The construction industry is reliant on the ability to sell completed units, and the ability to buy those units is dependant on consumer’s ability, and their willingness to spend money. We may see a prolonged period of people not looking to purchase new homes, and not seeking to tie themselves into what could prove to be an unrealistically expensive mortgage when interest rates realign, but even a corrected market needs to plough on.
Compariqo is a leading distributor of construction related insurances in the UK, and provides finance solutions to property developers. Contact us today to see how we can assist your business through the current market conditions.
Need cover on a project?
As an independent broking business, Compariqo is focused on arranging structural warranty and insurance cover for residential developments for our customers. As well as a suite of complementary insurance products to meet the demands of developers and SME builders, we can also source a wide range of finance solutions through our relationship with one of the UK’s top business finance specialists and their extensive panel of lenders, meaning we can cover all of your construction insurance and property finance needs.