Building materials fall by 1.9%, so why is activity still faltering?

Building materials declined by 1.9% annually in February, although construction activity was seriously disrupted by declining availability of key materials.

Homebuilding and renovating activity saw significant declines with the number of completed projects down compared to the same period last year.

Although there is anticipation for an upturn in activity later in the year, this is dependent on declining interest rates, which could bet set to happen with inflation falling to 3.2% in March.

Here we take a look at the latest updates and statistics to see how it might affect how much it costs to build a house.

Brick and block deliveries continue to decline

The construction industry experienced a 1.6% year-on-year decline in construction costs in January 2024, according to the Building Materials and Components Statistics.

The cost of building 'New Housing' in March saw an annual decline of 0.6%, whilst 'Repair & Maintenance' costs declined by 1.4%.

However, brick deliveries continued their trend of decline as they fell annually by 9.3% in February and have steadily declined since 2022.

Block deliveries also fell annually in February, this time by 7.5% and have decline consistently since 2021.

Sales of sand & gravel decreased by 0.7% in Q4 2023 compared to Q3 of 2023 representing a 15% annual decrease from Q4 of December 2022.

Ready-mixed concrete sales decreased by 3.1% in Q4 2023 compared to Q3 2023, representing an annual 8.1% decline.

Homebuilding construction down 30% in some areas

The Bank of England released its Agents’ Summary of Business Conditions, covering intelligence gathered up to March 2024.

It revealed construction output volumes have continued to decline, although it is anticipated to improve later in the year if the Bank Rate declines.

Despite there being a rise in the number of completed projects, new orders remain weak for the homebuilding sector with homebuilding significantly decreasing over the last year, although the rate of decline is slowing. 

It has been revealed that increasingly complex planning applications and approvals could hinder the pace of growth.

Private and social homebuilding activities have also slowed down, with some areas seeing a 30% decline, which has been attributed to an increase in mortgage rates and declining self build mortgage options.

How else could your project be affected?

The Federation of Master Builders (FMB) State of Trade Survey has revealed builders have experienced a decline in demand for their services.

In the fourth quarter of 2023, 63% of members noted a rise in material costs, a slight decrease from the previous quarter's 71%. The resulting financial strain has prompted 66% of members to raise their prices.

However, nearly half of respondents expressed concerns about potential losses or falling below expected profit margins. Additionally, one in five members stated that they are limiting new staff hires due to increased expenditures.

In the private housing sector, there are signs of a cooling housing market as new inquiries decrease and house prices drop and the housing sector faced a sharp decline of 14.9% in 2023, but is projected to recover with a 5.5% increase in 2024 and a 7.0% increase in 2025.

The State of Trade Survey also revealed a slight improvement in recruitment challenges, but a significant portion of members still face difficulties.

Over a quarter of respondents noted a decrease in their number of employees. Specifically, 36% of members are finding it challenging to recruit carpenters, while 34% are encountering similar issues with hiring bricklayers.

Around a quarter of respondents also reported difficulties in hiring general labourers whilst nearly half of FMB members stated that project delays are occurring due to struggles in hiring skilled workers.

This is corroborated by the ONS who reported that 25% of construction businesses in the UK were experiencing skilled labour shortages.

There are roughly now 244,000 fewer workers in the construction sector compared to three years ago, the ONS says, attributable to workers returning to the EU and early retirees. 

This shortage is particularly affecting SME (small and medium-sized enterprises) builders since it can take a minimum of three years to train up a skilled tradesperson. 

Tim Balcon, CEO of the Construction Industry Training Board (CITB), claimed: "The greatest challenge UK construction faces over the next five years is recruiting the number of people required to fill the growing number of vacancies."

How to navigate price fluctuations

If you’re planning or in the middle of building work, then planning as far as you can in advance is pivotal to ensure you aren’t caught out by price rises.

The CLC advises self builders to work closely with their supply chain and communicate your requirements early with suppliers, distributors and builders merchants.  

Builder and Homebuilding & Renovating Show speaker and expert Andy Stevens offers the following advice: "There will be material price rises so you need to work closely with your builder and budget for these. 

"It’s so hard to predict accurately because of the volatility of the market, but make sure you work closely with your builder as we are in the merchants all the time and hear about price changes before anyone."

Andy Stevens

Andy Stevens, an award-winning builder and owner of Surrey's Eclipse Property Solutions, specialises in new builds, extensions, and loft conversions. Apart from hands-on work, he's an active figure in the construction sector serving on the Board of the Federation of Master Builders and was formerly Vice President. He also supports construction-related charities and advocates for mental health awareness within the industry.