New study predicts 8.3% labour cost increase this year
A report by construction cost consultant Currie & Brown has found that the ongoing skills shortage within the construction industry could become the biggest challenge facing developers today.
Estimating that the UK will need an additional 225,000 construction workers by 2027 to meet demand, the market outlook also forecasts that labour costs could rise by 8.3% in 2023, after already increasing by 5.8% in Q4 2022.
Key messages from the report include:
- The National Infrastructure Programme is key to growth
- Shifting cost drivers will impact procurement
- Skills shortage will increase costs
- Collaboration is crucial
- Advanced technologies will deliver increasing benefits
To date, inflation remains high and the primary challenge facing the construction sector. However, the profile of price inflation is changing.
Nick Gray, Chief Operating Officer, Currie & BRown
While the high materials and fuel costs experienced in 2022 are beginning to ease, skills shortages are starting to bite, jeopardising project delivery and driving up costs.
Meanwhile, construction payroll firm Hudson Contract have reported that average earnings for self-employed tradespeople were 5.4% higher in April 2023 than in April 2022.
Earning an average weekly pay of £941, the wage is still below the increase seen in living costs over the same period, and -4.4% lower than March 2023 due to the Easter holidays.
Annual house price growth falls further in May
The latest house price index from mortgage lender Nationwide has revealed that annual house prices have slipped from -2.7% in April to -3.4% in May.
House prices also fell -0.1% in the month (Apr: 0.4%) to reach an average value of £260,736.
Following tentative signs of improvement in April, annual house price softened again in May…however, this largely reflects base effects with prices broadly flat over the month after taking account of seasonal effects.
Robert Gardner, Chief Economist, Nationwide
Average prices remain 4% below their August 2022 peak.
Property website Zoopla has stated that “the outlook for the housing market hangs in the balance”, as it reported that UK house prices have dropped 1.3% in the last six months – albeit no longer falling as quickly.
Reporting that lower mortgage rates in the first half of 2023 have supported an increase in housing market activity, Zoopla revealed that the annual rate of house price growth is 1.9%; down from 9.6% in the same period last year.
Meanwhile, official data has found that UK residential transactions in April 2023 have slumped by -32% in comparison to April 2022, and are -29% lower than March 2023.
HMRC figures estimate that there were 67,220 transactions in the month, which rises to 82,120 following seasonal adjustments.
The large drop is attributed to a strong market in March, the final month of Help to Buy, and fewer working days in April.
HBF calls on SME builders to share industry challenges
The Home Builders Federation (HBF) is inviting small and medium sized housebuilders to complete a short survey about their experiences in the construction industry.
The survey is designed to build on the HBF’s State of Play report which was published earlier this year, which found that 92% of SMEs are unhappy with the Government’s approach on housing.
The survey is open to all SMEs, and not just HBF members.
Housing View 