Turner & Townsend is calling for more adaptability in the industry as construction adjusts to the northern leg HS2 cancellation in new report
Turner & Townsend have also highlighted the opportunity for other real estate and infrastructure programmes to draw on supply chain capacity that will be released after the government’s decision to scale back plans on part of the high-speed rail project.
The report also warns that ongoing economic headwinds will continue to impact the construction industry overall.
Price volatility in materials, plant and equipment weighs heavily on the sector, which is also grappling with capacity and workforce shortages.
Housebuilding activity has fallen due to high-interest rates
This quarter is the eighth consecutive quarter of growth in construction output but is still a notable slowdown since 2022 when the sector expanded by 6.5%.
The decrease in pace has been driven by falling housebuilding activity as a result of high-interest rates and concerns over affordability.
Total new housing registered a decrease in output of 2.4 percent throughout the quarter.
The report also notes the government’s plans to divert spending from the HS2 cancellation in the north to a £36bn transport investment.
The water sector is also set to invest £98bn in upgrades between 2025 and 2030.
The construction sector remains resilient in economic storms
Commenting on the report, Martin Sudweeks, Turner & Townsend, said: “The full effects of the government’s change in tack on infrastructure remain to be seen. For now, we need to focus on the challenges at hand and make the most of programmes in planning and in flight.
“The construction sector remains resilient as we weather economic storms, with particular areas in real estate, such as retrofit and refurbishment, strengthening significantly. More broadly, the real estate market can also expect to see reflected benefits from the planned investment in transport in the North of England as greater access opens opportunities for development.”
