Economic uncertainty and no dramatic uplift in 2024 were the key findings from the Builders Merchants Federation’s (BMF) latest Building Materials Forecast Report, with both sales volumes and sales values for heavyside building materials falling over the course of 2023.
The BMF’s final forecast for the 2023 shows negative growth of -3.5% over 2022 – down from -1.4% in our previous forecast, published mid-year.
There are few signs that this situation will improve in the short term, with the BMF forecasting a further decline in Q1 2024, down by -2.2% on Q1 2023.
However, building material sales are forecast to improve later in the year, as interest rates begin to fall and we move towards a general election. While the forecast remains cautious, it does envisage sales of building materials tipping into positive territory, with annual growth of +0.4% anticipated for 2024, increasing to +1.0% in 2025.
Commenting on the findings, John Newcomb, CEO of the BMF, said: “Fourteen interest rate rises alongside the effects of a cost-of-living crisis have taken their toll both on consumer confidence and the new house building market for well over a year, we have seen both volume and value sales through builders’ merchants fall during 2023.
“This mirrors much of what has been observed in the wider UK economy and its impact on the housing market, where new housebuilding registrations have plummeted to their lowest levels since the start of the pandemic and close to levels last seen in 2009. Against this background, we are unlikely to see a dramatic upturn in 2024, but we are cautiously optimistic that we will see the first signs of recovery.”
Thomas Lowe, BMF’s industry analyst and economist, added: “In addition to the slowdown in new house building, the current burden on household finances means repair, maintenance and improvement work (RMI) has been competing with other priorities for consumers’ cash.
“This has resulted in households postponing larger scale RMI projects. However, the data shows evidence of lightside RMI projects remaining relatively strong with all lightside categories seeing year on year value growth in the recent quarter, providing one ray of light within a pretty gloomy picture overall.
“While market conditions are expected to remain volatile, arguably the long-term economic health of the merchanting sector is improving. As net inflation of building materials settles faster than the macroeconomic picture, this may allow for a faster recovery once consumption starts to pick up again as pressures on household disposable income start to alleviate.”
