A return to housebuilding growth is unlikely until the second half of 2025, according to the latest statement from the UK Construction Leadership Council’s Material Supply Chain Group.
John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Group, released a statement saying recent growth in construction activity had largely been due to civil engineering and non-housing related expenditure in the public sector. Housebuilding and industrial construction have seen output levels decline, they added.
“There is a degree of optimism for 2025 stemming from the reforms published in the National Planning Policy Framework setting out the Government’s plans in relation to the release of green belt land,” the statement said.
“There is disappointment, however, that the changes are not set to benefit smaller housebuilders as they are geared towards volume house builder applications.
“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 will be to ensure that resources are in place to support increased development from the outset.
Capacity has been reduced in line with demand over the past 18 months. While this can be increased, and there are reports that brick capacity is already being added back in, there remains uncertainty surrounding the speed of doing so.
“Some manufacturing firms may well be cautious around investment until they see evidence of growth in the economy.”
As advised in the previous Materials Supply Group statement (27 November 2024), the market has been advised of price increases ranging from 3% to 8% in January, stemming from higher energy costs. Further price increases may follow, stemming from higher employment costs.
“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.”
Members of the group strongly advocate that industry continues to work closely with their supply chain, and forecast and communicate their requirements early with suppliers, distributors and builders’ merchants.
