Despite the dire rhetoric about the recession, industry insiders remain confident that the US construction market can trend higher. In a report published by GlobeData, the $1.9 trillion industry can expect to see an additional 3% growth between 2023 and 2026. The organization cited new investments in renewable energy, housing and transportation for support his assertions. They also clarified that most of the growth is coming from the residential sector, where demand remains at a boiling point. Despite this optimistic outlook, GlobeData made it clear that production is likely to remain weak through 2022. They mentioned that this stems from “subdued investor confidence amid sharply rising construction costs.” While it is true that there is light at the end of the tunnel, it is too early to tell where the end is.
At this point, some data suggests that housing supply and demand will soon take a back seat to cost…
US housing market sees decline in building permits and increase in commercial projects
Reuters recently reported that building permits fell 3.2% in April. Meanwhile, new home sales fell 16.6%. Industry experts say soaring mortgage rates and rising costs are essentially driving first-time buyers out of the market.
Considering inflation has upended so many industries, it’s no surprise that Americans are cooling off on homeownership. Median home prices jumped 19.6% over the past year. This puts the average cost to buy a house for the modest sum of $450,600. It’s not exactly what you’d call a “starting house” price, and it’s unlikely to change anytime soon.
But while residential construction may slow, the outlook for commercial construction in the United States is expected to soar. Indeed, according to a Dodge Data and Analysis Report, there remains a massive backlog of pre-pandemic projects waiting to start. Despite rising material prices and ongoing supply chain issues, commercial construction continues to improve.
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However, DD&A called its prediction a few stipulations. For example, the company measures its start-up data in dollars, not the number of projects. This leaves the analysis open to misinterpretation in a rising inflation environment.
Still, DD&A remains adamant that the industry is “in the green.” In fact, had it not been for the supply chain issues, they claim we would have a much more dramatic recovery.
MMI construction: China looks to overcome a lackluster 2021
When it comes to the industry’s impact on the global construction MMI, many experts are looking to China for answers. It is undeniable that China remains the largest construction market in the world, worth over $1 trillion in the United States. However, the industry has been plagued by COVID-related issues for almost three years now.
A recent report published in Business Wire confirmed what many people expected. First, the Chinese construction industry grew by only 2.1% in 2021, the lowest figure since 2007. Fortunately, projections for 2022 are more optimistic. In fact, despite ongoing shutdowns and supply chain issues, the industry expects 4.5% growth by the end of the year.
This is largely due to large public investments in “capital projects” in the energy and transport sectors. The fact that several major projects were launched at the end of last year helped the report. Among them are the $7.2 billion Wuhan Chow Tai Fook financial center and the $4.2 billion Qingdao Shenyuanhai offshore wind farm.
UK housing demand strong amid record inflation
Arcadis construction economists recently revised their price forecast to include inflation of up to 10%, a Dramatic increase from the previous assessment of 5% to 6%. The organization defended its new figures by citing how Russia’s war in Ukraine has affected the availability of energy and materials.
They went on to say that “projects with greater exposure to the steel market, including the logistics sector and certain infrastructure sectors”, could see even higher inflation – up to 12% or 13%. %!
Despite all this, The Guardian demand cited for new homes booming across UK In fact, two of Britain’s biggest homebuilders, Crest Nicholson and Bellway, saw strong sales throughout the first quarter. So far, the trend has continued into the second quarter. Bellway expects to complete more than 11,100 homes by July despite supply bottlenecks. On top of that, the company reports that the increase in selling prices has largely offset inflationary costs.
In the United States, there are some signs that the housing market may be starting to calm down a bit. With the average cost of living skyrocketing around the world, builders may run out of buyers. For now, the industry continues to ride the wave. Still, they are watching closely for signs of slowing momentum.
By AG Metal Miner
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