In recent months, there has been a surge in the cost of building materials, due to a perfect storm of economic factors. While the construction industry was already struggling with rising prices in 2021, the recent outbreak of war in Ukraine has only worsened the situation.
According to data from the Royal Institution of Chartered Surveyors, the cost of construction materials is at a 40-year high. This makes the cost of building, and rebuilding, properties much higher, a cost which is then passed on to buyers.
While the recent outbreak of war in Ukraine has further disrupted global markets, the construction industry has been struggling with high prices for several months. As you might imagine, one of the main causes for this was the coronavirus pandemic.
The first wave, and subsequent lockdown, had two major effects on the construction industry. Not only did production of important materials slow down, but there was a boom in demand as many homeowners took up home improvement projects, putting more pressure on supply chains.
Furthermore, there is still a large degree of lingering uncertainty due to Brexit. According to Architects’ Journal, new regulations and delays in shipments mean that buying materials from overseas can be costly and difficult.
In the same vein, restrictions on free movement have also led to labour shortages in the industry, such as a lack of HGV drivers and construction workers. This drives up costs, as employers have to offer higher wages to attract staff.
Another major issue facing many construction companies is the rising cost of energy. According to figures from government watchdog Ofgem, the energy price cap is set to increase by 54% from April due to ongoing shortages of oil and gas.
This could put significant pressure on energy-intensive industries such as concrete, steel, and cement production. Due to their higher manufacturing costs, they will likely pass this on to the consumer, further driving up the price of materials.
According to Homebuilding & Renovating, the war in Ukraine will only have a minor direct impact on prices, as only 1.25% of UK building materials are sourced from Russia, Ukraine, and Belarus.
That being said, it could have a significant indirect impact due to the energy crisis driving up construction costs.
While the shortages of goods and materials may ease with time, as supply chains adapt to the post-pandemic world, they are significantly driving up costs in the short term. This can pose a problem, as your valuation for your property may not be properly up to date.
This means that if your property was damaged, such as by flood or fire, your insurance may not be able to pay for a full rebuild. This could mean that repairing it could cost you a significant sum of money.
If you want to avoid this, working with a professional can help. A broker can help you to get an up-to-date valuation, giving you greater peace of mind that you have the right protection for your needs.
If you’re concerned about the cost of potentially rebuilding your property if it gets damaged, we can help. Email firstname.lastname@example.org or speak to a member of our expert team on 0207 382 7710.