The expected bounce back for construction post Covid is stalling, leading to questions about a difficult short term future for the sector as it output falls and challenges grow.
Currently construction is facing a range of challenges, including a general decrease in output, material prices hikes and shortages, gas price hikes, a lack of hauliers and a shortage of skilled labour, while much of the European migrant labour routes now closed or restricted by visa requirements.
In the wider market, housing prices are now decreasing nationally, on average by £9,000 in July, following their unrealistic boom created by the stamp duty holiday. However, viewed year-on-year, house prices are still soaring. For the longer term, construction and transport are identified as two industries that will struggle to meet future zero carbon targets.
The Construction Enquirer recently reported that output for the entire sector fell for the fourth month running, leaving new levels of construction work 3.2% below the high mark of February 2020, just before the pandemic started. This is significant nationally, as in 2019 construction was responsible for nearly 6% of the UK economy, contributing £119billion.
The global slowdown caused by the pandemic, combined with issues created by Brexit, have compounded to create a crisis in materials availability and costs that is having a knock on effect across construction. Those operating in the custom and self build arena are highly sensitive to these changes, as they typically buy in smaller amounts, store fewer materials in advance and buy locally as need occurs, all of which are now an issue. This has resulted in complexities for companies and self builders costing and scheduling activities on site.
The Federation of Master Builders acknowledged the issues and their impacts on SME housebuilders, with Brian Berry, Chief Executive of the FMB, saying: “We know that material price increases and skills shortages are contributing to the decline, with our members telling us this is their number one issue.
“According to a recent FMB survey 98% of builders are facing material price increases. Worryingly, new work and repair and maintenance in private housing are the main causes for this decline, which are the backbone of the workload for small builders.”
In a piece of welcome news, the Construction Leadership Council reported a slight levelling off in demand for the domestic repair, maintenance and improvement sector. Despite a strong pipeline of work ensuring demand will remain high, the CLC reported that man lead times were stabilising, which is welcome news for all. Brick and block and bagged cement remain an issue, as do concrete roof tiles, which have an average lead time of 24-30 weeks.
But despite this, UK haulage issues remain a problem across the board, meaning extended delivery times will be in force for the remainder of 2021. The CLC also reported that global shipping remains an issue, with a 25% reduction since the start of the pandemic, with issues expected to continue into Q2 of 2022.