Rising energy prices set to fuel further material inflation, as construction output slows

Housing completions fall in 2020, and construction growth slows

Research by Housebuilder magazine ahead of their Housing Market Intelligence Report this week revealed that new home completions by the top 25 housebuilders fell 19% in twelve months, as the effects of Covid on the industry became further evident.

In a report which covers 2020, housebuilders completed just over 90,000 homes, compared to 111,439 in 2019.

Meanwhile, the pace of construction growth slowed further in September 2021, as construction buyers reported output volumes rising by the smallest extent for eight months.

Material shortages, labour issues and haulage delays saw the IHS Markit/CIPS UK PMI index fall from 55.2 in August to 52.6 in September.

The Department for Business, Energy and Industrial Strategy also reported this week that average material costs across the construction sector were 23.5% higher in August than they were a year ago. This is an increase on the figure reported in July, which reported a rise of around 20%.

And it doesn’t look as if price rises will settle any time soon, with rising energy costs set to fuel further increases. British Steel have increased costs by £30 per tonne, and consultants Arcadis have warned that other materials with energy-intensive processes, such as bricks and blocks, could also see prices rise.

Johnson promises to fix broken housing market in keynote speech

This week saw the Conservative Party Conference held in Manchester, in which Boris Johnson delivered his keynote speech, claiming that his government was “turning the tide” on declining home ownership.

The PM said that “housing in the right place at an affordable price” would boost people’s contentment and their “productivity”.

This week also sadly saw the death of former Housing Secretary James Brokenshire, who died at the age of 53. Brokenshire, who held the post from April 2018 to July 2019, passed away on 7 October after being diagnosed with lung cancer in 2017.

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