There has been an upsurge in the cost of building materials across the globe, and particularly in the UK . There are many examples of this, including the price of concrete reinforcing bars increasing by almost 118% since 2015. During the same period, the price of fabricated structural steel increased by 128.6 %
Going into 2023, the current cost of building materials is the primary concern for those involved in the construction business
There are a myriad of reasons for this surge in costs. Below is a list of the reasons that construction material prices have increased so rapidly and so alarmingly.
War in Ukraine
Across Europe, the conflict in Ukraine has caused a huge surge in energy prices. Because of this, the feed-in costs for factories that specialise in building material has surged.
As well as this, Ukraine is also a major supplier of steel but no longer has the means to manufacture or export it. At the same time Russia, a key exporter of raw materials, has been faced with sanctions that ban many of its exports. This confluence of factors has resulted in material shortages which has led to a surge in prices for these materials.
Fallout from the Pandemic
“The COVID-19 pandemic resulted in a significant shortage of raw materials because of factory shutdowns and labour shortages,” explains Malcolm Newman, the founder of Premier Lofts.
“This resulted in a much higher price for building materials. However, even after the lockdowns eased, many manufacturers did not lower their prices due to the global supply chain issues that the pandemic caused.”
This shortage of supply has also been met with an increased demand for two reasons, both linked to the pandemic.
One is that during the pandemic, the UK was faced with higher demand for home renovation projects as people staying at home looked for projects to occupy their time with.
Another is that a consequence of the pandemic has been a rise in work from home culture. This has further contributed to increased demand for home renovation. Increased demand and shorter supply has led to a major increase in the price of raw materials.
Brexit
Britain’s departure from the EU has majorly affected all aspects of trade, and in particular the cost of building materials in the UK.
The reason for this is two-fold. One is that the time to market for materials has increased, due to longer wait times, checks, and delays at the border. Another is that Brexit has resulted in nationwide labour shortage because many factory workers involved in the manufacturing of building materials have left the UK to return to their home country.
Inflation
It is no secret that the inflation rate in the UK is reaching highs that we haven’t seen in decades. In fact we are currently experiencing the highest inflation rate in 40 years and the rate is forecast to rise to 18% in 2023.
Several factors have contributed to the increase in inflation, including a huge surge in energy costs and the war in Ukraine. As construction material vendors anticipate these higher prices, they include them in the cost of their goods in order to keep their business running.
This surge in energy prices has massively impacted the manufacturing and shipping costs of construction materials in other ways too. Mainly because the manufacture of these materials is such an energy-intensive process and the shipping process requires a great deal of fuel.
Environmental Factors
Environmental factors have also contributed to the upsurge in the cost of building materials. One factor is that there have been a string of recent, disastrous meteorological events that have impacted the supply chain for materials such as timber. An example of this is the wildfires that ravaged the West Coast of the USA and parts of British Columbia.
Another factor related to the environment is the adoption of regulations to lessen the impact of the construction industry on the environment. One such example of this are regulations involving the responsible sourcing of wood leading to an increase in the cost of timber extraction and manufacturing.