Housing boom sends price of materials to record high
BUILDERS have reported a record rise in the cost of core materials following their busiest spell for six years.
The boom has led to a shortage of supplies, driving inflation in the sector for seven months in a row to its highest rate since April 1997.
Tim Moore of financial services company IHS Markit said: “Shortages of construction materials and much longer wait times for deliveries from suppliers were a sting in the tail for the sector.”
He has been working with the Chartered Institute of Procurement and Supply on a survey of the industry which has flagged up the potentially crippling leap in the prices of materials facing construction companies.
The CIPS research uses an index to measure output – with anything above 50 showing growth. Last month’s reading of 61.6 for the industry was down only slightly from the 61.7 in March.
Mr Moore added: “Aggregates, timber, steel, cement and concrete products were all widely reported as in short supply by survey respondents.”
Duncan Brock, group director at the CIPS, said: “Brexit issues remained a factor affecting deliveries from the EU – and suppliers generally were struggling to meet the sudden rush in demand leading to shortages of basic materials. This inevitably led to the sharpest rise in cost inflation in a generation as builders scrambled to catch up on projects.”
CIPS research shows big projects, including the HS2 railway, had their strongest recovery since 2014. House builders also report “robust demand”.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the construction sector is currently “firing on all cylinders”.
But, warning of unwelcome sideeffects, he added: “The recent surge in input costs, especially for steel, timber and transportation, with increasingly long waits for supplies, could choke off the recovery in the near term.”