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Construction is set for recession this year with output set to fall 4.7% according to the Construction Products Association鈥檚 (CPA) winter forecast. 

Private housing new build and private housing repair, maintenance and improvement 鈥� the largest and third largest construction sectors 鈥� are set to be the worst affected, with falls in these areas partially offset by continued growth in infrastructure. 

CPA economics director Noble Francis said it was 鈥渨orth keeping in mind the broader context鈥� and that this recession is not likely to be nearly as severe as the one experienced after 2008, when output fell 15.3% over two years. 

While the industry is predicted a slow return to growth (+0.6%) in 2024, the long-term trajectory for the private housing market could go two ways, according to the products body. 

The main forecast anticipates a soft landing, with a sharp decline in demand in the first quarter 鈥� driven by rising mortgage rates, falling real wages and poor consumer confidence, as well as a less friendly government policy environment 鈥� followed by a recovery this spring 

In this scenario, the sector would still experience an 11% fall as housebuilders focus on completing existing developments 鈥� and this could fall even lower if demand does not recover from Spring as mortgage rates drop, as outlined in the CPA鈥檚 lower scenario. 

Private housing repair, maintenance and improvement is expected to fall further from the historic highs of 2021, as homeowners begin to delay smaller, discretionary improvement work. 

A decline of 9% is forecast for this year, followed by slow growth of 1% in 2024, with energy-efficiency retrofit the one area set to buck the general trend. 

While infrastructure remains resilient, benefitting from publicly-funded megaprojects such as HS2, Thames Tideway Tunnel and Hinkley Point C, growth in output is expected to slow due to cost inflation. 

The sector鈥檚 output is predicted to grow 2.4% in 2023 and 2.5% in 2024. 

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Chancellor Jeremy Hunt said in the Autumn Statement that capital expenditure would be maintained in cash terms, meaning that current projects are likely to go overbudget and greater hesitancy about signing up to new schemes. 

In the medium-term, projects towards the end of the government鈥檚 Spending Review are expected to be pushed back into the next review period due to budgetary constraints.  

After 4.9% growth in 2022, infrastructure output is forecast to rise by 2.4% in 2023 and 2.5% in 2024. 

Francis said the resilience of the infrastructure sector meant it was 鈥渕ore important than ever that government maintains its commitments to meeting its own targets by investing in levelling up, its infrastructure pipeline and transitioning to Net Zero鈥�.