Material prices continue to rocket as builders wait more than a year for bricks
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 and found that firms are waiting up to a year for bricks, six months for roof tiles and slate and two months for timber.
In addition, SME building firms were also asked by what percentage different materials have increased in price over the past 12 months and reported that the cost of insulation materials had risen by 16%, timber by 8%, bricks by 9% and roof tiles by 8%.
The impact of these material price increases includes:
· More than half of construction SMEs (56%) have had their margins squeezed, this has gone up from one third (32%) reporting this in July 2017;
· 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;
· A third of firms (30%) have recommended that clients use alternative materials or products to those originally specified, this has gone up from one in ten reporting this in July 2017;
· Nearly one fifth (17%) of builders report making losses on their building projects due to material price increases, this has gone up from one in ten reporting this in July 2017.
Discussing the findings, Brian Berry, Chief Executive of the FMB, said: “Material prices have rocketed over the past year…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.”
But those supplying the construction and home improvements industry could help ease the problems caused to firms by these shortages by providing as much notice as possible if they suspect a product is likely to be in short supply, he suggested. Brian continued: : “We are calling on builders merchants to give their customers as much advance warning of forthcoming material prices increases or wait times as possible so that firms can warn their customers and plan ahead. We are also advising builders to price jobs and draft contracts with these material price rises in mind.”