UK Construction Market Report 2Q 2023
Materials
Nearly 80% of our survey respondents said that the trend of settling materials price increases seen at the end of 2022 continued in 1Q 2023.
The ‘All work’ Construction Materials Price Index from BEIS shows that towards the end of 2022, the index reduced slightly and stabilised, helped by falling energy prices and reductions in demand due to worries of global economic weakening.
The index peaked in July 2022. Figure 24, which uses data from BEIS and ONS, shows that whilst significant reductions occurred between July 2022 and February 2023 for materials including fabricated structural steel, concrete reinforcing bars and timber, other products saw significant increases in the period.
Overall, prices are stabilising but remain elevated compared to pre-pandemic levels — the ‘All work’ Construction Materials Price Index is 41% higher in February 2023 than in February 2020.
Increases are generally more predictable and less volatile. However, there are some fairly significant price increases seen for products such as insulation concrete, asphalt, aggregates and some mechanical and electrical plant and equipment. Some manufacturers hedged gas prices in autumn 2022 at higher levels and inflation impacts production costs, including staffing and materials.
The Construction Leadership Council’s (CLC) Product Availability Statement published on 4 April highlights that “Price inflation remains the number one issue. While prices are not rising as quickly as they have been, they are still substantially higher than 18 months ago and profit margins are being squeezed.” It says that this is particularly concerning for SME builders and regional house builders.
Nearly 80% of our survey respondents said that the trend of settling materials price increases seen at the end of 2022 continued in 1Q 2023.
The ‘All work’ Construction Materials Price Index from BEIS shows that towards the end of 2022, the index reduced slightly and stabilised, helped by falling energy prices and reductions in demand due to worries of global economic weakening.
The index peaked in July 2022. Figure 24, which uses data from BEIS and ONS, shows that whilst significant reductions occurred between July 2022 and February 2023 for materials including fabricated structural steel, concrete reinforcing bars and timber, other products saw significant increases in the period.
Overall, prices are stabilising but remain elevated compared to pre-pandemic levels — the ‘All work’ Construction Materials Price Index is 41% higher in February 2023 than in February 2020.
Increases are generally more predictable and less volatile. However, there are some fairly significant price increases seen for products such as insulation concrete, asphalt, aggregates and some mechanical and electrical plant and equipment. Some manufacturers hedged gas prices in autumn 2022 at higher levels and inflation impacts production costs, including staffing and materials.
The Construction Leadership Council’s (CLC) Product Availability Statement published on 4 April highlights that “Price inflation remains the number one issue. While prices are not rising as quickly as they have been, they are still substantially higher than 18 months ago and profit margins are being squeezed.” It says that this is particularly concerning for SME builders and regional house builders.
Over 90% of our survey respondents said that the trend of improved materials/product availability is continuing in 2023.
Generally, lead-in times continue to improve, but they are not yet back to pre-pandemic levels and it remains beneficial to engage early and consider advanced orders where appropriate.
Feedback from the survey was that it is easy to be caught out and the picture can quickly change, particularly if large quantities are involved. Respondents also highlighted issues around specialist products, such as IT equipment and safety modules used on university research projects.
The CLC’s Product Availability Statement echoed this: “There is good availability for the vast majority of building products.” It noted that plasterboard is currently on allocation, but it is unlikely to be a long-term issue due to measures in place to increase capacity.
Also resolved, the CLC says, are the longstanding issues with bricks, blocks and boilers following significant investments by brickmakers in increased production, with the first new facility adding 185 million more bricks a year ready later in 2023. Boiler backlogs have cleared. However, semiconductors remain an issue, affecting the delivery of solar photovoltaic equipment and LED lighting.
