The Week That Was - 13 January 2023

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Cost of building products continues to rise

Despite drops in the cost of raw materials and energy, contractors are facing months of rises in the price of building products, according to building products distributor SIG.

Plasterboard manufacturers have already increased prices this year by up to 17%, while insulation materials are set to rise by 10%.  This has been caused, in part, because manufacturers who are on fixed forwards contracts for energy which are coming to an end will be facing a sharp rise in energy costs, even though energy prices are falling from the high point in Autumn last year.  According to the Construction Leadership Council, this means that there is expected to be significant upward pressure on prices in the new year, in particular for manufacturers of energy intensive products such as bricks, cement, glass, insulation and plasterboard.  Against this is a gradual slowing in demand for construction products over the last quarter of 2022, helping to ease pressures on production supply and allowing product availability to recover. 

For more information, please see here.
 
Decline in construction activity

December 2022 saw the fastest drop in UK construction activity since Spring 2020 and the early stages of the COVID-19 pandemic, according to the latest Purchasing Manager's Index (PMI) data.  Construction companies are also cutting back on staff and purchasing given weaker client demand. This is the first fall in the monthly index since August 2022. 

December's data reflects a reduction in orders placed with UK contractors, which is said to have been driven by weak client demand caused by higher prices. There was also a fall in employment, the first since January 2021, with vacancies said to be going unfilled. Higher borrowing costs, double digit inflation, rail strikes and material shortages continue to affect the industry, with heavy snow in December also causing disruption. 

For more information, please see here.
 
Banks to consider mortgage applications for flats with dangerous cladding from 9 January 2023

Following the Grenfell tragedy in 2017, banks had not considered mortgage applications for flats with dangerous cladding.  Further to updated guidance from the Royal Institution of Chartered Surveyors (RICS), a number of UK banks including Barclays, Nationwide, Natwest, HSBC and Santander have all said that they will consider applications on these properties from 9 January 2023.  Buyers will need to evidence that the dangerous cladding will be removed in order to secure a mortgage. 

For more information, please see here.

Mental health app launched for construction workers

Blu-3 has launched the first ever mental health app solely aimed at the construction industry.  The new app, called Ownminder, has been launched at its data centre project in Slough. 

With the risk of suicide in the construction industry over 3 times higher than the male national average, the app is designed to prevent mental health issues amongst construction workers specifically. It also aims to tackle stigma within the construction industry. 

For more information, please see here.

Inflation affects plans for Yorkshire's tallest building

Developers have scaled back on their plans to build Yorkshire's tallest building in Sheffield due to inflation and rising construction.  The new plans reduce the building from 38 storeys to 26 and include 913 studio apartments, of which 29 would be accessible, 15 two-bed flats and 35 six-bed flats.  In a planning statement released by the developers they explained that the project is not 'sufficiently viable' to meet affordable housing contributions. 

For more information, please see here.

Thank you to Oliver Bulleid and Amy Taylor for contributing to this week's edition.