The cost of living crisis has dominated the headlines in 2023, with particular emphasis on the rising cost of filling our shopping baskets and cars. But even before Russia’s invasion of Ukraine hit the headlines and contributed to the spiralling cost of food and fuel, the price of building materials was already rising rapidly.
Materials such as timber, plywood, roof tiles and cement have all increased in price in recent years and it has become very expensive – or even impossible – to source the materials required for some building projects. Although inflation is now slowing, prices are now 43% higher than they were in January 2020, a couple of months before the first coronavirus lockdown. To cover themselves against the cost of rising prices, tradesmen and labourers have also been putting up their day rates, leading to further expense for homeowners and commercial clients alike.
Why are building materials so expensive?
A range of factors have all converged to create the current situation, including:
Following Britain’s departure from the EU, it is taking longer for building materials to get where they need to be due to queues, checks and other delays at the UK border. Furthermore, many European factory workers previously involved in the manufacture of building materials have now left the country, resulting in widespread labour shortages.
- The Covid-19 pandemic
The global shutdown that followed the coronavirus outbreak caused significant disruption to supply chains around the world, resulting in widespread shortages of key building materials. This was compounded by the DIY craze that swept the UK – and the resulting surge in demand for construction materials – as bored homeowners turned to renovation projects to keep busy.
- The war in Ukraine
Russia’s illegal invasion of Ukraine has also contributed to price inflation; prior to the invasion, Ukraine was a major supplier of steel, while Russia’s exports market has crumbled under the various sanctions imposed upon it by other nations. The sharp increase in energy prices has also made factories more expensive to run.
Will costs now start to come down?
At the start of 2023, the UK was expected to go into recession as growth slowed and inflation continued to rise. Now, according to the Confederation of British Industry (CBI) the economy will grow marginally by 0.4% this year, rising to 1.8% in 2024. So, what does this mean for building materials prices?
Due to rising prices and a squeeze on household incomes, there is evidence that demand for building materials is finally beginning to fall as homeowners put renovation plans on hold. Due to skyrocketing mortgage rates, some prospective buyers are pulling out of purchases altogether. Whilst the costs of labour and materials are expected to eventually stabilise, however, those awaiting rapid price decreases will be sorely disappointed, with experts warning that we’re unlikely to see materials prices drop below pre-pandemic levels.
Ultimately, long-term recovery all depends on the economic outlook over the next few years and the success (or otherwise) of attempts to bring inflation under control. An economist at the Builders Merchants Federation, Thomas Lowe, said in a recent article published in Construction Index:
“Much depends on the effectiveness of the Bank of England’s strategy to bring down inflation. If we start to see signs of economic stabilisation, we expect the market to pick up in the latter months of this year and continue to slowly improve into 2024. We are, of course, keeping a watchful eye for any change in conditions that may affect the forecast for 2024.”