Public housing starts set to fall 22 per cent in 2012
Public housing starts are set to reduce by 22 per cent in 2012 and by a further 5 per cent in 2013, according to a forecast by the Construction Products Association.
In 2011 public housing starts fell to 21,110, which was 10 per cent fewer than in 2010 due to an 11 per cent reduction in housing association starts. In contrast public house building by local authorities increased, with starts rising by 12 per cent.
This is thought to be a result of changes to planning policy and the funding mechanism for affordable housing.
The CPA warns that with capital grant reducing significantly over the next two years, affordable housing providers will be forced to find new ways to finance developments.
Private housing starts in 2011 were more positive, climbing 11 per cent year-on-year, and the CPA is predicting 5 per cent growth this year, followed by 11 per cent in 2013. It says further growth will depend on the success of the National planning policy framework and localism agenda.
Overall construction output is set to fall 2.9 per cent in 2012 and the sharp decline in public sector construction is believed to be the key factor.
Data published by the Office for National Statistics yesterday showed the UK has gone back into recession, with falling construction output partly to blame for the second consecutive monthly decline in gross domestic product.
The industry is expected to return to growth only in 2014 and is likely to be driven by private housing and commercial activity.
Michael Ankers, chief executive of the CPA, said: ‘With new orders for construction falling significantly at the end of last year, 2012 is going to be a difficult year for the construction industry with output forecast to fall by almost 3 per cent. The construction industry accounts for nearly 9 per cent of GDP and therefore is going to be a major constraint on growth in the wider economy over the year ahead.’