The impact of COVID-19 led to a reduction in production and supply chain disruptions. Although it appears that the two-year-long shortage of building materials has subsided, for the most part, prices for a variety of components are still high. This will have an impact in 2023 on the construction industry and homeowners who wish to renovate or self-build. While supply levels of timber are now largely back to pre-COVID levels, other materials are still heading south.
Why has the cost of building materials risen so dramatically?
Several factors have contributed to the rise in building materials worldwide. The most obvious is the COVID-19 pandemic which caused a delay in production, supply, and manufacture due to labor shortages. The shortage is expected to continue through 2023. In the UK and Europe, Brexit also had an impact as businesses adjusted to the new rules and regulations. The Russian invasion of Ukraine in February 2022 threw energy supplies and materials shipping into unknown territory. In short, everything came at once. According to the National Association of Home Builders, 80% of residential builders reported difficulties finding framing lumber in 2021, up from 32% in 2019.
With the cost of living rising quickly, people are grasping an even tighter hold on their pockets. The construction industry and building suppliers are feeling the pinch too. The increasing energy bills and higher business running costs, paired with the ongoing war in Ukraine have caused chaos worldwide.
The housing shortage has been exacerbated by a lack of skilled labor in the construction industry. Forging partnerships with other builders and material suppliers could help avoid shortages of certain materials or labour. It’s a case of working together to meet the demand.
Which building material costs have increased?
Construction labor shortages and the lasting impact of COVID-19 are also contributing to the low stock of building materials. There is a range of building materials that have seen a price increase including:
- Brick – Brickmaker Forterra has issued a statement to customers warning of a fourth price increase in just 12 months.
- Steel – Steel prices have increased in response to an increase in iron ore, which is one of its major components. Concrete reinforcing bars (steel) increased by almost 118% since 2015.
- Timber – The first half of 2022 saw a staggering 34.5% price increase across the UK timber market.
- Cement – The average increase in cement prices around the world (excluding China) was around 5.9% in 2022.
Looking forward to 2023
It’s not all bad news. A tight market means it’s a good time to build as demand is still high as investors look to make the most of their money and families choose to improve instead of move. Any dip in prices is great news for contractors and moving into 2023 we hope to see more stability in the market as we continue to put the impact of COVID-19 behind us. Looking forward to 2023, the industry needs to adapt to the changes and be innovative. Organizations, builders, and investors need to discover ways to work around them.
- Relocate your supply chain and focus on local suppliers
- Choose more sustainable sources of materials
- Invest in projects that are already in motion. You can check out our future developments here.
- Make your supply chain greener
- Research other options and learn from peers and industry professionals
Prices for construction materials may have increased significantly over the last two years but builders are still building. You’ve probably noticed when you’re driving that you’re never too far away from a new housing development. There are opportunities out there for investors and builders to make 2023 a successful and profitable year. We have developments across Birmingham and plans for 2023 and beyond. To discover more about investment opportunities in Birmingham, get in touch with our team today.