A surprising new threat appears to be casting its shadow over the housebuilding market. For the first time ever, a ‘materials shortage’ has reared its head as a top threat in a SWOT analysis of the housebuilding market.
This is the fifth report of its kind and, as the market appears to have woken up this year, concern is being expressed over whether merchants will be able to meet the demand.
The general consensus across the board is that there is a wave of positivity in the maketplace with much more activity in all areas and stronger consumer confidence. I recently read an article that stated we have reached a five-year high with regards to the number of new homes built in the UK. In the first half of the year, 67,422 new homes were registered with the National House-Building Council (NHBC) the highest figure since 2008.
The government-backed Help To Buy scheme has definitely orchestrated a large proportion of this growth as the equity loans help first-time buyers get on the property ladder and, with the mortgage guarantee aspect coming into play, this should further benefit the market by making it easier to get a mortgage and allowing people in England to get 95% mortgages
Richard Werth, chief executive of Banner, has said that shortages of labour and materials resulting in construction inflation and delays have already started but, hopefully, it is temporary – depending on suppliers having confidence of sustained volume increases.
Supply chain collaboration
One comment I found particularly insightful was from Sarah White, residential market manager at British Gypsum, who said: “To maximise this emerging trend, collaboration across the whole supply chain remains essential. Government, indstry bodies and housebuilders, as well as manufacturers, need to ensure the success of initiatives such as the Help to Buy scheme, and provide sustainable, comfortable homes for years to come.”
It is all very well analysing the marketplace in the short term and getting enthusiastic about the housing boom, but if the whole supply chain isn’t mindful of the rate of growth and demand then we could hit a stumbling block. We are now faced with the challenge of keeping the market constant by keeping the supply of new homes in line with demand.
Of course, it’s a nice “problem” to have, and at Drain Center we will ensure that these issues do not impact negatively on any of the contractors that we supply – but let’s hope the rest of the marketplace does too!
Dave Young is trading director at Drain Center.