Material prices continue to increase

More than half of small building firms say that rising material prices are squeezing their margins, and the same percentage have had to pass these price increases onto consumers, according to the latest research by the Federation of Master Builders (FMB).

Small and medium-sized (SME) building firms were asked which materials are in shortest supply and have the longest wait times. The average results were as follows (in order of longest to shortest wait times):

• Bricks were in shortest supply with the longest reported wait time being more than one year
• Roof tiles were second with the longest reported wait time being up to six months
• Insulation was third with the longest reported wait time being up to four months
• Slate was fourth with the longest reported wait time being up to six months
• Windows were fifth with the longest reported wait time being more than one year
• Blocks were sixth with the longest reported wait time being up to four months
• Porcelain products were seventh with the longest reported wait time being more than one year
• Plasterboard was eighth with the longest reported wait time being up to two months
• Timber was ninth with the longest reported wait time being up to two months
• Boilers were tenth, with the longest reported wait time being more than one year

SME building firms were also asked by what percentage different materials have increased over the past 12 months. On average, the following rises were reported:

•  Insulation increased by 16%
• Bricks increased by 9%
• Timber increased by 8%
• Roof tiles increased by 8%
• Slate increased by 8%
• Windows increased by 7%
• Blocks increased by 7%
• Plasterboard increased by 7%
• Boilers increased by 7%
• Porcelain products increased by 6%

Consequently, more than half of construction SMEs (56%) have had their margins squeezed, which has gone up from one third (32%) reporting this in July 2017, and half of firms (49%) have been forced to pass material price increases onto their clients, making building projects more expensive for consumers – this has gone up from less than one quarter (22%) reporting this in July 2017.

Furthermore, a third of firms (30%) have recommended that clients use alternative materials or products to those originally specified (up from one in ten reporting this in July 2017), and nearly one fifth (17%) of builders have made losses on their building projects due to material price increases (up from one in ten reporting this in July 2017).

Brian Berry, chief executive of the FMB, said: “Material prices have rocketed over the past year. The reason for this could include the impact of the depreciation of sterling following the EU referendum still feeding through. High demand due to buoyant international markets could also be contributing to price increases. What’s particularly worrying is that when prices have increased mid-project, almost one fifth of builders have absorbed the increase and therefore made a loss. Also, if material price increases weren’t enough of a headache for building firms, they are also experiencing material shortages with wait times ticking up across a range of materials and products. Worst case scenarios include firms waiting for more than one year for a new order of bricks.”