Unless you have been living under a rock, you would have heard that building costs and house prices are both soaring at the moment. Why? Here’s my tuppence worth…
We are a nation of homeowners. When the government locks us up in our homes for a prolonged period, we get time to realise our homes are too big, too small, or in the wrong location. So, we either move house, or improve your current one, or move and improve that one. Add to that the new ‘work from home’ (WFH) phenomenon and you have a high demand for rural/coastal properties, and builders in those locations to modify them. So skilled trades are spread thin and in short supply.
Now we tackle materials… when countries throughout the world went into lockdowns they closed manufacturers of building materials too. Our industry have has always had a ‘just in time’ approach to materials, and the slightest blip in manufacturing sends ripples through the supply chain. Add to that the transport delays caused by Brexit, and you’ve got builder’s merchants with half empty shelves.
What does that do to prices? Guess. If a qualified trades person has more work than they need, and a whole in their finances from 2020/21 lockdowns, then of course they are going to put their prices up to fill the hole and save a buffer for the future. If suppliers have a greater demand for their materials than they can service, they will increase those costs to cover the gaps in their balance sheet caused by the lack of usual volume of sales. It is simple supply and demand.
So, what does that mean for your project. Well for the first time in my working life I’m hesitant to give speculative build costs. I have seen quotes for some raw materials double in 12 months – bonkers. Thankfully as I write this in October 2021 I think (hope) we are just easing over the hump, and things are starting to settle back down. They won’t go back to 2019 prices, but they will hopefully stabilise at an affordable level.
Crystal ball time: I predict that a project that would have cost £1,500/m2 in 2019 will cost £1,800/m2 by the end of 2022, which isn’t crazy growth. The only problem is that in between times those costs could be anywhere!
