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United Kingdom Construction Industry Report 2023: Rising Mortgage Rates to Slow Down the Growth of the Housing Construction Whilst Commercial Construction Activities to Support Growth

Research and Markets
·6-min read
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Dublin, March 02, 2023 (GLOBE NEWSWIRE) -- The "United Kingdom Construction Industry Databook Series - Market Size & Forecast by Value and Volume across 40+ Market Segments in Residential, Commercial, Industrial, Institutional, Infrastructure Construction and City Level Construction by Value - Q1 2023 Update" report has been added to ResearchAndMarkets.com's offering.

Construction industry in United Kingdom is expected to grow by 4.4% to reach £163,253 million in 2023.

Despite near-term challenges in certain construction sectors, medium to long term growth story in United Kingdom remains intact. The construction industry in United Kingdom is expected to grow steadily over the next four quarters. The growth momentum is expected to continue over the forecast period, recording a CAGR of 3.9% during 2023-2027. The construction output in the country is expected to reach £190,146.5 million by 2027.

The surging cost of living due to the growing inflationary pressure is expected to further impact consumer confidence in the United Kingdom in 2023. This along with rising mortgage rates means that housing sales will be severely impacted from the short-term perspective, thereby affecting the growth of the residential construction market.

While residential construction is projected to remain subdued, commercial construction activities have remained stable across the country, thereby supporting the overall construction market in the United Kingdom. Government spending towards infrastructure construction activities will also play a pivotal role in determining the growth of the British construction industry over the next three to four years.

Rising mortgage rates to slow down the growth of the housing construction market in the United Kingdom

The Bank of England announced a series of interest rate hikes in 2022 to bring down inflation. This trend is projected to further continue in H1 2023, as inflation is affecting the monthly budget of many around the country. These rate hikes have also resulted in higher mortgage rates. According to the Bank of England, new mortgage rates have increased to 3.09% in October 2022. This is the highest since 2,014.

The increase in mortgage rates means that consumers no longer see their home purchases as affordable, thereby leading to a decline in sales of units. With the trend projected to further continue in 2023, contractors and developers are expected to be left with higher unsold inventories. This will lead to a decline in new residential construction projects, thereby affecting the growth of the overall construction industry in the United Kingdom from the short to medium-term perspective.

Commercial construction activities to support the construction industry growth in 2023

The United Kingdom's construction market experienced a surge in commercial construction activities. According to the S&P Global/CIPS UK Construction Purchasing Managers' Index (PMI), commercial work registered an overall rise in business activity at 51.1. Although it declined compared to October 2022. In 2023, the publisher expects the commercial construction segment to keep supporting the overall market.

In January 2023, Aldi, one of the leading supermarket firms operating in the country, announced that it has received permission for constructing its supermarket in Stockton. The multi-million-pound commercial store will be built across 1,867 square meters, opposite the Asda supermarket in Stockton.

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Such construction projects, along with the investment in new data center facilities are projected to keep providing growth support for the overall construction industry in the United Kingdom over the next three to four years.

United Kingdom construction firms are set to benefit from the government's investment in African infrastructure projects

In October 2022, the United Kingdom government announced finance packages for two major infrastructure projects in Africa. The investment, totaling £174.5 million, is projected to be beneficial for construction firms in the country. Notably, these infrastructure projects announced in Benin and Togo will help in unlocking £35 million in export opportunities for construction-related businesses in the United Kingdom, thereby supporting the growth of the overall construction industry in the country from the short to medium-term perspective.

The infrastructure construction project in Benin and Togo are expected to transform the government complex in the region. Over the last 12-month period, the UK Export Finance has offered support of more than £760 million for various projects and the British government is committed to financing even more infrastructure projects in the West and Central Africa region from the short to medium-term perspective. This will create more export opportunities for businesses in the country, thereby supporting the growth of the sector over the next three to four years.

Scope

United Kingdom Economic Indicators

United Kingdom Top Cities Construction Data

United Kingdom Residential Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Housing type (multi family, single family)

  • Key cities (Tier - 1, Tier - 2, Tier - 3 segmentation)

  • Price point / income level (luxury, mid-tier, affordable)

  • Construction stage (new construction, re-development & maintenance)

United Kingdom Residential Green Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Green building by Housing type (multi family, single family)

  • Green building by Key cities (Tier - 1, Tier - 2, Tier - 3 segmentation)

  • Green building by Price point / income level (luxury, mid-tier, affordable)

United Kingdom Commercial Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Office (further broken down by Grade A, Grade B, and Grade C)

  • Retail (further broken down by Grade A, Grade B, and Grade C)

  • Hospitality (further broken down by Grade A, Grade B, and Grade C)

  • Restaurant (further broken down by Grade A, Grade B, and Grade C)

  • Entertainment

  • Sports facility

  • Construction stage (new construction, re-development & maintenance)

United Kingdom Commercial Green Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Office green building construction

  • Retail green building construction

  • Hospitality green building construction

  • Restaurant green building construction

  • Entertainment green building construction

  • Sports facility green building construction

  • Other commercial green building construction

  • United Kingdom Industrial Green Building Construction Coverage: 10-year market size & forecast in value and volume (area and units)

United Kingdom Institutional Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Healthcare construction

  • Educational construction

  • Public sector

  • Construction stage (new construction, re-development & maintenance)

United Kingdom Institutional Green Building Construction Coverage: 10-year market size & forecast in value and volume (area and units) terms by

  • Healthcare green building construction

  • Educational green building construction

United Kingdom Infrastructure Construction Sectors: 10- year market size & forecast in value terms by

  • Marine and inland water infrastructure

  • Utility system construction (oil and gas infrastructure, communication infrastructure, power infrastructure, water and sewer infrastructure)

  • Transportation infrastructure (highway, street and bridge construction, railway construction, airport construction, and tunnel construction)

  • Construction stage (new construction, re-development & maintenance)

United Kingdom Green Infrastructure Construction: 10- year market size & forecast in value terms

For more information about this report visit https://www.researchandmarkets.com/r/9cl6ac-kingdom?w=12

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