The construction industry has been adversely impacted over the past two years by a multitude of factors, including soaring inflation, the cost-of-living crisis and, not forgetting, COVID-19.
Unprecedented disruption to global supply chains and subsequent shortages, delays and, ultimately, rises in material costs have all put pressure on a sector already struggling to deliver on Government targets.
Combined with increasing labour and land prices and an ongoing robust demand, it is no surprise that there has been a 75 per cent increase year-on-year in the number of house builders going bust.
The situation is playing havoc on projects up and down the country as builders wait on supplies.
The industry has also seen complications arising from Brexit, which has affected all aspects of trade and labour availability from a shortage of HGV drivers to regulatory changes at borders.
Housebuilders have been faced with the scarcity of building materials and rising costs, all of which have also affected the delivery and price of new homes.
More recently, Russia’s invasion of Ukraine has created more uncertainty, piling more cost pressures on a number of key products, particularly bitumen, cast iron, rebar and timber. Further, wholesale energy prices in the UK have been directly affected by supply constraints to Europe, resulting in increased costs of energy intensive products, including steel, cement, bricks, blocks and glass.
Last year, the cost of raw materials in the UK increased over 10 per cent, compared to 1.4 per cent the year earlier. The UK’s leading manufacturer of building materials and supplies, Forterra, increased its brick prices by 12 per cent. Meanwhile, timber was up 30 per cent in the year to April 2022 while fabricated steel rose by 52 per cent in the year to May 2022. (Department for Business, Energy and Industrial Strategy – Building materials and components statistics: June 2022).
Developers are trying to ride the storm, which is conspiring to create a dark period for the industry.
And the big question is ‘when will it end’?
The disappointing truth is, nobody knows. With so many interconnected factors impacting the complexity of the supply chain – from materials to containers, to transportation to labour – predicting when the industry will pick up is unknown.
What we do know is that navigating the near future will take patience, organisation and resilience from the construction industry.
At LW Developments, also know that whatever happens, we will continue to deliver to the highest standards.
Dean Williamson, Director at LW Developments, said: “In this industry, it’s vital that those looking to carry out building work don’t compromise quality and excellent customer service by defaulting to hire someone with the cheapest quote.
“With effective and concise planning and strong relationships and communication with our supply chain, we’re proud to have been able to continue developing to our high standards, ensuring quality service for our customers.”
For more information on the construction industry, get in touch.
Dean Williamson MRICS