The construction industry is playing an important role in the UK’s recovery from the Covid-19 pandemic as one of the economy’s fastest growing sectors.
This has led to builders experiencing the highest number of enquiries for 10 years in the first few months of 2021. However, increased demand and the ongoing impact of the pandemic is leading to rising costs and a shortage of materials.
Consumer demand for building projects has surged in recent months, according to recent research. The IHS Markit Construction Purchasing Managers’ Index found that British construction activity increased at the fastest rate in nearly seven years during May.
Meanwhile, the latest Trade Survey from the Federation of Master Builders (FMB) shows that builders saw enquiries rise at their fastest rate in 10 years. Compared to the final two months of 2020, the study also found that during the first quarter of this year:
The rise in demand is thought to be related to people spending more time at home during the pandemic and, as a result, looking to make improvements.
With Covid restrictions set to ease further next month, and fewer people going on holiday abroad this summer, demand is likely to continue rising.
Although builders will be happy with a rise in demand, many are reporting skills shortages and issues accessing key supplies. The FMB report shows:
A separate report from the Construction Leadership Council (CLC) suggests a shortage of timber, steel and cement, as well as electrical components, plaster, plasterboard, concrete and paint.
On top of materials and skills shortages, tradespeople are dealing with sharply rising costs.
There were record surges in the price of timber, bricks and steel in May, according to IHS Markit. Meanwhile, CLC’s research shows price hikes of 10 per cent for things like chipboard, up to as high as 80 per cent for timber.
Official figures from the Department for Business, Energy and Industrial Strategy (BEIS) show the cost of materials rose 8.4 per cent for all construction work in April compared to a year ago – a monthly increase of 2.6 per cent.
The combination of a materials shortage and rising costs is having an impact on tradespeoples’ ability to service extremely high levels of demand.
It’s also been suggested that there’s not enough tradespeople to meet demand – with the BBC reporting a shortfall of 10,000 workers in Wales alone.
Alongside unprecedented demand, there is a variety of reasons for delays, supply shortages and rising building costs. These include:
It’s important to keep up to date with the latest news so you can stay one step ahead of any changes that could affect your business.
For example, changes to Covid travel restrictions or Brexit could have an impact on the supply of materials.
Builders dealing with unprecedented demand could also benefit from reviewing their pool of subcontractors and supply chains. Are there any changes you could make which could reduce costs or speed things up?
Identifying vulnerabilities and considering risks at all times can help builders to take advantage of booming demand despite ongoing cost, resource, and supply challenges.
Due to uncertain market conditions and situations changing quickly, it’s also important to manage your books effectively. Read our guides on budgeting, cash flow, invoices, and government support.
Our new report reveals the full impact of the pandemic on over 1,200 UK small business owners.
It tackles issues such as which regions have been hardest hit, the total anticipated cost of the pandemic, and whether small businesses have received enough government support.
Download your free in-depth report. Find out more about the cost of coronavirus and overall business confidence.
Our survey of tradespeople earlier this year found that they expect total costs due to lockdown to reach £18,039 on average.
However, they were optimistic for a steady recovery thanks to the vaccine rollout and roadmap out of lockdown.
Are you experiencing unprecedented demand, a materials shortage and rising costs? Let us know in the comments below.
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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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