Buyer demand soars, but so do material costs

Zoopla reports soaring buyer demand, amidst positive growth forecast

Zoopla have revealed that demand from potential buyers jumped by 49% in January, with house prices rising at an annual rate of 7.4%.

The property website reported in their latest house price index that the average house price in the UK is now £242,000, and warned of a continuing supply and demand imbalance.

The highest level of growth was experienced in Wales (11.3%), with London at the bottom of the table, achieving just 2.6% in the year.

Meanwhile, the latest quarterly forecast from the Construction Products Association (CPA) predicts that output in the industry will rise by 4.3% in 2022, after a spike of 13.3% in 2021.

The CPA’s Winter Forecast revealed that housebuilding will remain buoyant, with private housing set to rise by 3.0% in 2022 and 2023.

Builders’ merchant sales rise, but so do costs

The latest Builders Merchant Building Index report has revealed that the value of merchant sales in November 2021 was up by 17.4% since November 2020.

Whilst it was a record month in terms of value, there is no indication that material volumes had increased, with growth driven primarily by cost inflation.

Cost inflation continues to run rife in some areas. This week masonry manufacturer Forterra announced that brick prices would be increasing by 10%, with further increases planned.

At the same time, British Steel announced another price hike, increasing costs by £50 a tonne. This follows seven price increases in 2021, totalling around £340 per tonne.

Meanwhile, material and labour shortages have been blamed for a housebuilding slowdown in London, according to Sadiq Khan.

The Mayor of London cited the “double impact” of the pandemic and Brexit for leading to the shortages, which have led to severe increases in build costs, and pointed to data from the Office for National Statistics which revealed that almost a quarter of construction firms reported a shortage of labour in December.

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