Homebuilding industry continues to face challenges

New construction price hikes could be on the cards following a warning from key industry figures.

Hikes in material prices are expected to make new homes more expensive according to industry experts, which could impact first-time buyers looking to move up the real estate ladder.

Leaders of the Builders Merchants Federation and the Construction Products Association, John Newcomb and Peter Caplehorn, have revealed that the availability of materials has deteriorated sharply following the easing of Covid’s restrictions on construction work.

It also reflects similar predictions globally, as large economies such as China, the US and the EU multiply in the wake of lockdowns.

Industry leaders said previous reports of issues with wood, steel, pitched roofs, plastics and paints and coatings continue, but now there is growing concern about some electronic components and cement in bags.

The Office for National Statistics is forecasting a seven to eight percent increase in materials prices, with increases for some materials, such as wood, which are expected to more than double during the year.

They warn:

“The new carrier rules have exacerbated the shortage of drivers in the UK, which is another factor contributing to delays and delays not only in the construction industry but in many other industries as well.”

They continue:

“The surge in demand means that some SME builders are not able to buy essential materials, such as wood, cement and tiles, so easily off the shelves. This not only impacts their ability to complete projects, but also their business cash flow. “

And they conclude:

“Unprecedented levels of demand, both in the UK and globally, are expected to continue for the foreseeable future, bringing the importance of planning and communication to the fore. It is only by working together in a positive way that we can strive to provide customers with the products and solutions they need to complete projects in a timely manner. “

Meanwhile, Andy Somerville, Director of Search Acumen, commented on the March 2021 ONS Construction Output report, which is proving to be a boon to the UK economy. Data shows that private and public new housing production jumped 9.4% and 16.7% respectively in the past month. He said:

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

“The increase in new home construction activity is probably due in part to the fact that home builders are being encouraged by the boom in the UK property market due to the stamp vacancies. This is associated with the forthcoming reopening of the UK economy which is said to have improved business confidence levels throughout March, prompting businesses to push ahead with residential construction projects.

Sommerville spoke about the rising costs of construction inputs and acknowledged that they may have to pass the costs on to buyers. He added:

“However, rising input costs due to imbalances between supply and demand may cause some builders to curb new construction activity in the medium term, unless they can protect margins by passing costs on to the market. consumers.

He continued:

“With increasing construction a top priority for the government, more precise planning decisions will be crucial if home builders are to contribute to the Premiers’ target of 300,000 homes per year by the middle of this year.” the decade. Increased investment in digitizing real estate information will help home builders identify risks in advance, making production decisions more transparent and efficient. We are the first non-utility company to use the Line Search Before U Dig API tool, which is an example of using digital property information to better identify the risks and costs associated with a construction project before it has not started. “

Therefore, according to new data released by Datscha, a software and data company for commercial real estate, 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 the first. quarter of 2019.

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