The background
In advanced countries the construction industry has benefited from low inflation and interest rates. Businesses are doing well in general with insolvencies down, although Brexit-related doubts make the UK situation less clear. Globally housing demand is rising, driven by population growth and urbanisation, plus relatively low-cost borrowing. In the USA, however, interest rates are starting to rise, making borrowing more expensive. Conditions are becoming more difficult in China, and also in the Middle East, where oil prices remain low.
The future
The outlook for 2018 is for property prices to continue rising in developed countries, although over-valuation is a problem in New Zealand, UK, USA, France and Sweden. In fact Coface analysts’ headline prediction is that average selling prices globally will rise to pre-2008 financial crisis levels during 2018. The US industry is likely to benefit from President Trump’s promised boom in infrastructure projects.
Everyone involved in the construction sector knows how volatile it can be, because it is so dependent on external factors ranging from the economy to the weather. That’s why protecting the business from bad debt with Coface credit insurance is such a wise precaution.
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