Building costs go through the roof
Brick prices soaring, timber up 10 per cent ... biggest rises in years drive a slump in construction, just as Ministers move to fight homes shortage
BRICKS and timber have become the latest products to be hit by sterling’s slide after Britain’s decision to leave the European Union.
An investigation by The Mail on Sunday into the effects of the referendum has identified sweeping price rises of up to 35 per cent on some building materials.
The revelation comes in the week the Government unveils its Housing White Paper aimed at easing the country’s housing shortage with a massive boost to home-building.
The building industry is also under pressure from an acute skills shortage – which trade bodies warn may be made much worse if tradesmen from countries such as Poland find it more difficult to work in the UK.
The Mail on Sunday’s analysis of figures released last week shows prices on a wide variety of materials, including loft insulation, plasterboard and chipboard, rising at their fastest rate for 25 years.
The increases will hit not only those looking to buy new-build homes, but anyone thinking of extending their house or planning a loft conversion.
Wickes, Britain’s second biggest DIY retailer, told The Mail on Sunday that it had been forced to raise prices because of sterling’s decline.
In a statement last night, a spokesman for the store said it was ‘exploring ways to mitigate’ the drop in the pound and that the resulting cost price inflation was ‘industry-wide’.
Wickes is used by tradesmen as well as DIY enthusiasts and is owned by builders’ merchant Travis Perkins, which has a £6billion turnover.
The Mail on Sunday’s investigation also revealed that in recent weeks suppliers had been warning trade customers about impending cost rises. In one such communication, seen by this newspaper, tradesmen were sent an extensive list of price rises on raw materials and basic construction products that they face between now and the end of April.
It reveals that major suppliers are raising the price of key products across the board, with some loft insulation material up 12 per cent, some plasterboard up 10 per cent, and some MDF and chipboard up 7 per cent – far ahead of the headline annual inflation rate.
The investigation revealed Wickes had raised prices on a number of essentials, with the steepest on timber. Some items were subject to price rises of 35 per cent, with the cost of a 2.4m-long piece of treated, sawn timber measuring 19mm by 32mm up from £1.59 to £2.15.
On average, industry sources said the price rises for timber were 10 per cent, while sand and aggregate were up by 5 per cent. By contrast, the general Consumer Prices Index measure of inflation showed an annual rise of just 1.6 per cent.
The Wickes spokesman said: ‘The devaluation of sterling is producing industry-wide inflation. We are exploring ways to mitigate this with our suppliers, including switching to UK-sourced products. We remain confident we will continue to offer great value for customers.’ However, finding alternative sources of timber to traditional exporters such as Scandinavia is likely to be tricky in the short term and even in the medium term, particularly at good prices.
Meanwhile, one of Britain’s largest brick suppliers, Ibstock, said it was also raising prices on its ranges, with a ‘low-to-mid-single’ digit increase across its bricks this year.
A spokesman for Ibstock said the rise was being driven in part by energy price rises hitting its production costs. It said the increased cost of firing its kilns was due in part to the pound’s fall.
Sources in the building trade said other materials that rely on energy intensive manufacturing processes were also likely to see price increases. The revelation about the rise in the cost of building materials follows fears of price increases of up to 5 per cent on a vast swathe of products, from clothing to food, as Britain digests the consequences of the decision to split from the EU.
About a quarter of building materials sold in the UK are imported. Many others are manufactured using imported raw materials or, like brick-making, are affected by rising energy costs.
Last month, the Federation of Master Builders also warned of a shortage of labourers. Nearly one in eight comes from outside the UK, and the trade body said that the dearth of skilled builders could be exacerbated by the ‘hard’ Brexit proposed by Theresa May’s Government. A spokesman said: ‘The skills shortage in the construction industry has got worse and has now spread beyond bricklayers and carpenters to other key trades.’
The federation warned that the shortage of electricians and plasterers was at its highest in four years.
Chief executive Brian Berry said: ‘The Government needs to be taking note of the worsening construction skills shortage now we know the UK will be negotiating a hard Brexit.
‘The Prime Minister must ensure that the immigration system which replaces the free movement of people serves key sectors such as construction and house building.
‘Our sector relies heavily on skilled labour from the EU, with 12 per cent of the British construction workforce being of non-UK origin.’
Meanwhile, last week’s Purchasing Managers’ Index indicated that construction activity relapsed to a four-month low in January. Howard Archer, at economic forecaster IHS Global Insight, said: ‘This is a largely disappointing report, indicating a stuttering construction sector.
‘The clear possibility that the economy will slow appreciably over the coming months – despite its current resilience – and a lacklustre housing market are a concern.
‘There are also signs that some clients are reluctant to commit to major projects in an uncertain economic environment.’