Expect Construction Material Price Rises in January

CONSTRUCTION MATERIAL price increases, ranging from 3% to 8%, are set for January 2025. This is according to the final statement of 2024 from the Construction Leadership Council’s Material Supply Chain Group.

Construction Material Price Rises in January

The price rises stem from higher energy costs and further increases may follow due to higher employment costs, the Group warns.

The news comes against a backdrop of good levels of product availability overall. Previously reported issues regarding limited supply of aerated blocks should be resolved by the end of the first quarter of 2025.

During 2024, there has been reduced demand for much of the time. While there has been some recent growth in construction activity, the sector has been largely propped up by civil engineering and non-housing related expenditure in the public sector. Housebuilding and industrial construction have seen output levels decline.

There is a degree of industry optimism for 2025 arising from the reforms published in the National Planning Policy Framework and the release of green belt land. There is disappointment, however, that the changes are not set to benefit smaller housebuilders as they are geared towards volume house builder applications.

Recovery in H2 2025

Furthermore, the rate of housebuilding is unlikely to increase significantly until mortgage interest rates come down and consumer confidence returns. The Group remains cautious about predicting levels of growth, and believes we are unlikely to see any noticeable recovery until the second half of 2025.

The Group recognises that one of the biggest challenges of any recovery will be to ensure that resources are in place from the outset. This is because manufacturing capacity has been reduced in line with demand over the past 18 months.

While capacity can be increased, and there are reports that brick capacity is already being added back in, there remains uncertainty surrounding the speed of achieving this. Some manufacturers may well be cautious around investment until they see evidence of growth in the economy, says the group.

Housebuilding

The health of the housebuilding and home improvement markets are vital for many manufacturers. It is reflected in the market for gas boilers in 2024, which fell to 1.4 million (down from 1.7 million in 2023). Sales of heat pumps have not compensated for the fall in boiler sales, which is primarily due to a slowdown in house sales and the consequent renovation work.

Heat pump manufacturers, however, believe they have sufficient capacity to meet the government Future Homes Standard target of 600,000 installations by 2028.

Credit insurance remains a key concern for SME companies. Continued support from insurers is required to maintain confidence for parties both on the supply and buying side.

The electro-technical sector is warning of potential material shortages due to the vast number of products required for the increasing number of data centres. In addition, the fluctuation of precious metal prices, including copper, is affecting cable manufacturers. This issue may escalate in 2025 due to the roll-out of the charging infrastructure for electric vehicles.

The statement comes from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Material Supply Chain Group.

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