Housebuilding industry continues to face difficulties

New-build price hikes could be on the cards following a warning from leading industry figures.

Price rises in materials are set to make new build homes more expensive according to sector experts which could have an impact on First time buyers wanting to get on the property ladder.

The chief executives of the Builders Merchants Federation and the Construction Products Association, John Newcomb and Peter Caplehorn, have revealed the availability of materials has sharply worsened following the relaxation of Covid restrictions on building work.

This also mirrors similar forecasting predictions globally, as major economies such as China, the US and the EU surge following lockdowns.

The industry chiefs have said that previous reports of issues in connection to timber, steel, pitched roofing, plastics and paints and coatings still continue, but now there is growing concern over certain electronic components and bagged cement too.

The Office for National Statistics projects a rise of seven to eight per cent in material prices, with increases for certain materials, such as timber, expected to more than double during the course of the year.

They caution:

“New rules on hauliers have exacerbated the shortage of drivers in the UK, which is another contributing factor adding to delays and lead times not only in the construction industry but many other sectors as well.”

They continue:

“The surge in demand means some SME builders are not able to purchase essential materials, like timber, cement and roof tiles, as readily off the shelves. This not only impacts their ability to complete projects, but also the cash flow of their business.”

And they conclude:

“The unprecedented levels of demand, both in the UK and globally, is set to continue for the foreseeable future, placing the importance of forward planning and communication front and centre. Only by working positively together can we endeavour to provide customers with the products and solutions they require to complete projects in a timely manner.”

Meanwhile, Andy Somerville, Director at Search Acumen, commented on the ONS Construction Output report for March 2021 which is proving to be boon for the UK economy. Data show private and public new housing output jumps 9.4% and 16.7% respectively over the last month. He said:

“This latest set of data underlines that the construction sector is proving to be a boon for the UK economy.

“The rise in new housing construction activity is likely to have been partly driven by housebuilders being encouraged by the UK’s property market running hot due to the Stamp Duty holiday. This is coupled with the approaching reopening of the UK economy which would have improved business confidence levels throughout March, prompting firms to progress residential building projects.

Sommerville talked about rising construction input costs and acknowledged they might have to pass on the costs to buyers. He added:

“However, rising input costs as a result of imbalances between supply and demand may prompt some housebuilders to rein in new building activity in the medium term, unless they can protect margins by passing on costs to consumers.

He continued:

“With increased building high on the government’s agenda, more accurate planning decisions will be crucial if housebuilders are to contribute towards the prime ministers’ goal of 300,000 homes a year by the middle of the decade. Greater investment in the digitisation of property information will help housebuilders identify risks upfront, making production decisions more seamless and efficient. We are the first non-utility company to use the Line Search Before U Dig’s API tool, which is an example of using digital property information to better identify the risks and associated costs with a construction project before it has begun.”

Consequently, according to new released data from Datscha, a commercial property software and data company, the total number of new construction starts in the first quarter of 2021 was 87.3% lower than in the first quarter of 2020 and 128.8% lower than in the first quarter of 2019.

Today's Conveyancer