Despite uncertainty in the economy and the end of furlough, there is an ongoing surge in home improvements, but at what price to both businesses and consumers given materials and labour shortages?
Continuing low interest rates means that disposable income remains high, and many homeowners are remortgaging (up 174% so far this year*) to fund larger projects and take advantage of low fixed-rate deals.
However, materials, labour, and now fuel shortages mean that the cost of home improvements is increasing and could be adding around 20%+ on to design and build costs**.
Jamie Megson, director of Avail Mortgage Brokers, said that one family arranging a remortgage saw their quote for a single-storey extension and garage conversion rise from £50,000 to £70,000 in just two months.
Brian Berry, chief executive of trade body Federation of Master Builders, commented,
Over half of small, local builders can’t find skilled tradespeople and 98% have seen material prices soar due to lack of availability. These pressures will continue later into this year and likely beyond.
As a result of the continuing demand, experts say busy builders are demanding fees of up to £2,000 to reserve their services six months in advance.
The numbers around skills shortages are astonishing. According to HomeServe Foundation,
- 1.25million extra construction trades workers are needed by 2030.
- 228,000 apprentices are needed in key trades, with 61% being plumbers, electricians, and joiners.
- 1/5th of construction trades workers aged 55 or over will retire before 2030.
- 60% of home improvement and repairs work is done by firms with nine or fewer workers
Soaring demand for raw materials also continues with manufacturers struggling to rebuild stock levels which is impacting both consumers and businesses with higher prices and longer lead times.
The UK’s largest builders merchants are warning of considerable cost increases to raw materials amid industry-wide shortages. Figures quoted on cement/gypsum costs included increases of 15%, with timber at 10% and paint at 5%.
Although some product supply has improved slightly, certain items including, for example, bagged cement, bricks and blocks, concrete roof tiles, chipboard, lintels, and PVC products remain in short supply with some lead times around 24-30 weeks!
And unfortunately, these issues look set to continue with increasing pressures on transport, energy, and fuel prices.
Many consumers are unaware of the impact of materials and labour shortages and the pressures and delays facing tradespeople which will undoubtedly lead to a huge rise in complaints and disputes, absorbing even more time and resource and longer-term reputational damage.