Private RMI Shows its Strength With Output Growth

PRIVATE HOUSING repair, maintenance and improvement (RMI) output grew strongly in February, March and April 2021 by the highest levels for over a decade.

After the initial shock of the first national lockdown in March 2020, output levels quickly recovered. Even when the country was in lockdown in January 2021, private housing RMI output was at the same level as January 2020, at around £1.5bn.

There are a range of economic, social and demographic factors that influence the private sector housing RMI market, including increased population and the number of households, an ageing population, a growing number of single person households, and economic factors such as interest rates, inflation and the economic environment.

Fast Recovery

Alex Blagden Senior Research Analyst at AMA Research and editor of the Private housing RMI Market Report said, “Although 2020 was undoubtedly a difficult year for contractors working in private housing RMI, recent data is more encouraging. Output levels recovered quickly after the first national lockdown in March and April and rose to their highest monthly level for over a decade by March 2021, a total of £2.1 bn.

“Over the medium term, the net increase in private housing stock will drive up demand for RMI services, not only due to newbuild but also conversions of former commercial property into homes and the continuation of the Right To Buy programme. Output is forecast to increase from £19.3bn in 2020 reach £22.2bn by 2025.”

Contractors’ output in private housing RMI has been a fairly stable market in recent years, with total output value of around £22bn a year from 2017 to 2019. While demand for private housing RMI work fluctuates in line with trends in the overall economy, the peaks and troughs are less severe than for newbuild, as a large proportion of RMI is essential work, such as fire safety measures.

Skills Gap

Ongoing skill shortages in the construction sector continue to constrain the supply of RMI services. However, the proportion of contractors having difficulties finding skilled workers was lower in 2020 with hundreds of thousands of workers furloughed at some point during the year.

The construction workforce is also ageing: 37% of tradespeople are aged over 50, and the number of younger people taking up places on apprenticeship schemes is too low to replenish their numbers as older tradespeople retire.

Growth in the stock of privately rented properties will increase demand for RMI services. This is because clauses in many residential tenancy contracts forbid tenants from carrying out DIY home improvements. In recent years, there has been a slight shift back towards owner-occupation after growth in private rental up till 2016.

>> Read more about industry output in the news