Material prices level out for first time in a year

Construction material prices have stayed flat for the first time since September 2020.

The construction industry witnessed material costs soar in 2021, forcing some projects to be retendered and businesses to collapse.

But overall prices did not increase in the month to November 2021, according to the latest statistics produced by the Department for Business, Energy and Industrial Strategy (BEIS). The last month on record when material costs did not rise was September 2020, when costs dropped by 0.1 per cent compared to the previous month.

The price of steel and timber, two of the materials to see the biggest cost hikes in 2021, came down in the period. The price of imported sawn or planed wood dropped by 7.6 per cent, with fabricated structural steel prices going down by 0.3 per cent month on month. But imported sawn and planed wood is still 52.4 per cent more expensive than it was a year ago, while steel is 66 per cent more expensive than it was in November 2020.

Cement and plywood prices did continue to rise in November, rising by 0.6 per cent and 0.7 per cent respectively compared to October.

Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said contractors would welcome a respite to the price rises: “This is a single month’s statistics set against the backdrop of many months of contractors’ workloads being threatened by rising costs,” he said. “We hope this is the beginning of a trend in costs levelling off for our members after a prolonged period of cost pressures, and that this trend will continue into 2022.”

Timber Trade Federation (TTF) head of technical and trade policy Nick Boulton said that softwood stocks had largely been replenished throughout the supply chain, which led to price pressure reducing and import volumes decrease at the end of last year.

“However, the market is still some way off ‘normality’ as Brexit, HGV driver shortages and Covid-19 disruption continue to affect supply and demand, as well as labour availability,” he warned.

“We should also note that amidst strong global demand for construction products our current supply situation may not persist, and that some structural softwood products could once again come under pressure as we go into Q2 2022.”

Earlier this week, Mace Consulting predicted material-price growth could be nearing its peak. But it also warned that material and labour shortages are set to persist, driving up construction costs in the next year.

In a trading update released today, housebuilder Vistry said supply chain pressures had begun to ease at the end of 2021. It forecast construction costs will increase by around 5 per cent in 2022, and said it expects wage inflation to run ahead of material cost inflation.

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