According to the latest research by the Federation of Master Builders (FMB), more than half of small building firms say that rising material prices are squeezing their margins.
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:
1)Bricks were in shortest supply with the longest reported wait time being more than one year;
2)Roof tiles were second with the longest reported wait time being up to six months;
3)Insulation was third with the longest reported wait time being up to four months;
4)Slate was fourth with the longest reported wait time being up to six months;
5)Windows were fifth 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%;
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.
Brian Berry, Chief Executive of the FMB, said: “The rise in material prices is not just a problem for the country’s construction firms – it is also a problem for homeowners. Half of firms have been forced to pass these price increases onto their clients, meaning building projects are becoming more and more expensive. This problem has worsened recently with more than twice as many firms passing material prices on to their clients now compared with nine months ago.
“Now more than ever, it’s important that builders and their clients keep the lines of communication open in order to stay within time and within budget. Specified products or materials may need to be swapped for alternatives or clients will need to accept the additional cost.”
“We are calling on builders merchants to give their customers as much advance warning of forthcoming material price 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.”