The prices of materials will increase by 10% compared to next year, warns RICS | news

Material prices are likely to rise another 10% in the coming months, the latest sign that the severity of widespread scarcity has not yet peaked.

An analysis by the Royal Institution of Chartered Surveyors (RICS) found that the price increases would exceed the forecast price increase of 7% for the period.

Brian Berry, Executive Director of the Federation of Master Builders, said: “At a time when the workload and inquiries from builders are on the rise, expectations of a 10% increase in material prices over the next year paint a worrying picture for UK builders looking to want to recover from the pandemic. “

The latest RICS construction and infrastructure survey found that a record 82% of respondents reported material shortages limiting activity in the second quarter of 2021, up from 57% in the first three months.

A Gleeds survey of construction workers, also released this week, found that more than three-quarters of respondents expect the shortage to worsen in the next quarter.

And the Mineral Products Association (MPA) said in a new report that the demand for core building materials will remain high through 2022, with double-digit growth in sales of mineral products expected by the end of this year.

As a sign of current demand, the report showed that, despite the difficulties faced by many companies in sourcing materials, the mineral industry has supplied the highest quarterly quantities of some materials in more than 12 years.

The quarterly survey found that aggregate sales in the first half of 2021 reached their highest level since mid-2008, driven by demand for major infrastructure projects and highway projects.

Asphalt sales also rose 4.5% in the second quarter compared to the first quarter to over 6 million tons, the second highest amount since 2008 after a high in the last quarter of 2020.

Total asphalt demand through June 2021 was 4% higher than in 2019, with demand being particularly strong in Scotland and the East Midlands.

And mortar sales, a strong indicator of residential construction activity, rose more than 20% in sales compared to the first quarter at the second fastest quarterly rate since 2012.

The demand for mortar is in line with the figures from the RICS survey, in which most respondents have recorded an increase in private housing construction for the past six years.

About 50% of respondents said private housing activity increased in the second quarter, compared with 39% in the first quarter. Infrastructure also skyrocketed, with 45% reporting an increase in activity compared to 34% in the first quarter, with new energy projects seen as a growth driver.

However, the survey also raised concerns about labor shortages: 64% now said a labor shortage will limit activity, compared with 42% in the previous quarter. For bricklayers, the proportion almost doubled in the second quarter from 34% in the first quarter to 58%, while for carpenters it rose from 33% to 55%.

The overall outlook remained positive despite multiple stresses, with a balance of + 55% anticipating a further increase in workload, the highest number since early 2016.

And the outlook for profit margins rose slightly too, with a + 12% balance now expecting earnings to rise after nine consecutive quarters of negative results – though RICS said the number was only a modest improvement, warning that other survey results were provided a note of caution.

RICS chief economist Simon Rubinsohn said that despite an optimistic mood among companies, it was “mostly clear” that the industry was facing challenges. “At this point in time, the availability of building materials is a major problem for the participants in the RICS survey,” he said.

“But almost as important, the workforce and skills are increasingly cited as obstacles for companies looking to expand existing commitments or start new projects.

“At the moment, the topic seems to be most evident in the trades, but quantity surveyors are also highlighted as an area with growing shortages.”

A Gleeds poll on LinkedIn last month found that more than 80% of 300 respondents said that material shortages caused delays in their projects.

And the consultant’s summer report also found that the number of contractors reporting problems finding work had increased from 17.5% in the company’s spring report to 44%.

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