Strong results from housebuilders, as labour levels ease and steel prices rise

Housebuilders post strong results, but warn of rising costs

This week saw a handful of housebuilders publish strong results to the City.

Firstly, Redrow revealed that they are expecting their 2022 results to be approaching those of 2019. Reporting on the 19 weeks to 5th November, the developer stated that average selling prices were up 14% against the same period last year. However, reservations were slightly lower, at 0.68 per week, compared to 0.75 in 2020 – a figure the housebuilder identified as “unusually high”.

Meanwhile, Taylor Wimpey stated this week that they are targeting “significant” growth in completions in 2023.

The volume housebuilder reported a strong sales rate of 0.91 homes per week in the second half of 2021, compared to 0.76 during the same period in 2020, and revealed that it expected full year operating profit to be around £820m.

Vistry and Persimmon also posted robust results, but warned of build cost increases to come.

Vistry, expecting to make a pre-tax profit of around £345m this year, warned that they are anticipating build cost inflation in 2022 in the region of 4-5%, with material costs beginning to ease, but labour costs continuing to rise.

Similarly, Persimmon warned that they expect build costs to rise 5% in the coming 12 months, adding that they were “frustrated” by continuing planning delays.

However, the housebuilder, which has a turnover of £3bn, said private reservation rates in the period from July to November 2021 were 16% above the level seen in 2019.

Signs that labour supply is levelling out, as steel prices rise

Average weekly earnings for self-employed tradespeople increased by 1.5% to £927 in October, according to the latest figures from Hudson Contract.

However, the contract service provider stated that labour rates were beginning to stablise, with more people coming back to work following the pandemic.

Meanwhile, steel costs are continuing to rise. Research by Southern Construction Framework has revealed that prices have increased by 17% over the last three months, and 38% over the year.

The report also stated that some subcontractors are only fixing their prices for 24 hours, in the wake of unprecedented market volatility.

And, with British Steel announcing their seventh price rise this year, whilst warning that output at both of their UK mills would be decreasing, it looks like the ongoing volatility is set to continue.

British Steel have increased costs by around £380 per tonne in the last 12 months alone.

UK ranked as second best country to be a construction worker

Research into average salary, cost of living and accident rates has revealed that the UK is the second best country in the world to be a construction worker, according to Global Construction Review.

Using safety scores from Lloyd’s Register Foundation, and average wages using Numbeo and WorldPopulation’s cost of living index, the UK was beaten to the top spot by Switzerland.

The report found that the average UK construction worker receives a salary of £43,027 – boosted by a post-Brexit shortage of skilled labourers – and experiences an accident rate of just 8%.

However, the report did not take into account the damning statistics surrounding suicide and substance abuse experienced within the industry.

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