Private housing – Construction Products Association forecast

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The double digit growth in the housing sector is long gone according to the Construction Products Association's latest forecast which reports expectations of a two year contraction of the market for the nation's private house builders.

With housing starts tumbling in the first quarter of the year by 28 per cent, the association points out that were this trend to continue through the rest of 2008 the number of new starts for 2008 would be just 127,000, the lowest since 1981.

Combined with a reduction in social housing this would mean overall starts were lower than at any point since the end of the Second World War.

The forecast says: "Output is set to fall significantly over the course of 2008 and 2009 with recovery in 2010 and 2011 alongside that of the economy as a whole".

One concern is that any prolonged downturn will make it hard for house builders to gear up growth if, as anticipated, this market return in 2010 is rapid in terms of renewed demand for their homes.

Conditions also look gloomy for private housing repair, maintenance and improvement, with the credit crunch reducing disposable income, and therefore sentiment and spending among homeowners.

An upswing stemming from insurance payments from last summers floods will keep the sectors head above water this year but workloads are expected to contract in 2009, before returning to growth between 2010 and 2012.