Global residential construction to reach 61.3 million units in 2018

Worldwide construction of new housing units is forecast to reach 61.3 million units in 2018, according to a new report by market research company The Freedonia Group. It said annual growth in the residential construction sector would average +2.9% over the forecast period.

According to the World Housing study, although global population growth is expected to decelerate over the forecast period, Freedonia said declines in average household size would support +1.6% annual growth in the number of households, which would in turn boost demand for new housing. Changes in population distribution, mainly due to rural-to-urban migration, are also expected to bolster demand for new housing, particularly in urban areas.

Freedonia Group analyst Mariel Behnke said, “Rural-to-urban migration will be particularly strong in the two most populous regions -- the Asia-Pacific and Africa/Middle East -- and those new urban residents will boost demand for multifamily housing in urban areas.”

Worldwide, construction of new multifamily units will increase +3.2% annually through to 2018 with nearly 90% of growth taking place in the Asia-Pacific and Africa/Middle East regions. However, in those regions, and worldwide, single-family dwellings will continue to make up the majority of new housing units.

Higher income countries that suffered dramatic declines in residential construction during 2008 to 2013 are forecast to see some of the fastest gains in construction of new housing units, with advances coming from a depressed 2013 base. Spurred by a partial rebound in US residential construction, North America is forecast to post nearly +8% annual growth in new housing units.

However, the largest absolute gains in construction of new housing are expected in the Asia-Pacific and Africa/Mideast regions. Nearly 38 million new housing units will be constructed in the Asia/Pacific region in 2018, accounting for over 60% of the world total, even though the rate of growth in the region will be below the global average.

A declining average household size, as well as rising demand for housing in urban areas, will support the continued high level of construction, particularly in developing countries in the region.

New dwelling construction in the Africa/Middle East region is expected to reach 13.0 million in 2018 on +3.7% annual growth. Above average population growth and household formation will support rapid advances.