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CPA predicts long, deep fall in construction output

The Construction Products Association (CPA) has forecast that housing-starts will to fall levels not seen since 1924

Construction output is expected to fall by 9 percent in 2009 – the steepest decline in 30 years, says the CPA report.

'Unfortunately, this is the way it is', says Dr Noble Francis, author of the report. 'We have seen a steady negative progression since August 2007. Housing was hit first due to the short lead times and reliance on credit financing.'

According to the CPA, private housing will be the worst-hit sector and even when recovery begins, housing starts in 2013 are expected to be 20 percent lower than 2007. However, the high demand for housing suggests that recovery will be quick with double-digit growth expected between 2010 and 2012.

The CPA predicts that the government will fall short of its target to build 45,000 new social homes a year by 2011, despite the pre-budget announcement in November 2008 that provided £150 million to deliver an extra 2,000 social homes on top of the £400 million brought forward in September to deliver 5,500.

'22,000 homes were built in 2007, to double this is extremely ambitious' said Francis. 'The money is not extra, and there are concerns whether the government is a good enough procurer to spend the money that quickly.'

Health provides a ray of hope however, with predicted growth of 20 per cent during 2009 and the education sector is supported by the Primary Capital Programme and the Building Colleges for the Future scheme. Infrastructure too is boosted by the pipeline of future work, including Thameslink, Crossrail and the M25 widening.

Industrial projects will also be hit hard in 2009 with the construction of warehouses and factories expected to suffer steep falls in output. Despite maintaining growth in 2008 due to long lead times, commercial projects will also suffer in 2009 with a great many already cancelled. 'This sector is worth £16.5 billion' warns Francis. 'If it is hit hard it will drag everything further down.'

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