Barratt commits to MMC, whilst material price rises add to contractor woes

Mixed results from developers as Barratt commits to MMC

This week saw a varied set of results, as three housebuilders presented reports to the city. Brownfield regeneration specialist Berkeley Group stated on Friday that it was on track to deliver a pre-tax profit for the current financial year of £518m, and recognised the ongoing threat of build cost inflation due in part to Brexit and the pandemic.

Avant Homes’ results, however, did not make for such pleasant reading. The housebuilder fell to a £3m pre-tax loss in the year to April 2021, predominantly due to the takeover by Berkeley DeVeer, headed by former Persimmon chief executive Jeff Fairburn.

Finally, Barratt Developments reported pre-tax profits of £812m to the end of June 2021 – a reduction of 11% when compared to 2019. And, in efforts to address the worsening skills shortage, Britain’s largest housebuilder also announced that they are raising their target to build more homes using modern methods of construction, with 30% anticipated by 2025.

Material and labour shortages top list of contractor worries, as prices continue to rise

Meanwhile, the ongoing supply chain crisis has topped the list of concerns held by contractors, and the market doesn’t seem to be improving. According to a survey by Bibby Financial, three out of five firms stated that material shortages and delivery delays presented them with their greatest challenge.

To add to their woes, the Department for Business, Energy and Industrial Strategy (BEIS) reported this week that material prices increased by 4.5% in July, with the cost of some timber products rocketing by 23%, and prices for imported plywood nearly 82% higher than they were in August 2020.

This news came following warnings by leading brick manufacturers that costs are likely to increase by 10% in the New Year. Wienerberger have informed customers that prices will jump by 10.3% in January 2022, with Ibstock reporting similar increases of 10.5% from November, blaming higher energy and fuel prices, and haulage costs going up.

MHCLG announces £8.6bn funding to boost affordable housing production

Finally, this week saw the government announcing £8.6bn of funding in the first round of its Affordable Homes Programme.

The allocation – the largest single investment in affordable housing in a decade – was announced by the Ministry of Housing, Communities and Local Government, and will fund the delivery of almost 120,000 new homes, including 57,000 homes for shared ownership, and 29,600 for social rent.

Whether the programme will allow those who dream of owning their own home remains to be seen, but is sorely needed; with average house prices currently more than eight times average income.

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