The final statement of 2024 from the Construction Leadership Council’s Material Supply Chain Group continues to report good levels of product availability overall.
Previously reported issues regarding aerated blocks continue to be managed and supplies should be back in balance by the end of the first quarter of 2025.
However, this is against a background of reduced demand for much of the year. 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. Whereas housebuilding and industrial construction have seen output levels decline.
2025 outlook
The statement said 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. 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.
Price increases likely
As advised in the last Materials Supply Group statement, 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.
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.
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.
