A shortage of brick supply has been a contributing factor in rising house prices over the past decade, as growing demand continues to outstrip availability of housing.
Even with willingness from contractors to build homes following Brexit, the UK’s construction sector would require a total of 1.4 billion bricks in order to resolve the housing shortage in the UK. This is the equivalent of the total amount which would be needed to build all the houses in Leicestershire, reveals the Bricks Report from National Association of Estate Agents (NAEA), compiled with the Centre for Economics and Business Research (Cebr).
Between 2006 and 2016, the growing UK population triggered exponential growth in demand, and has now outgrown the number of houses being built. Given that in 2016 the average UK home is made up of 5,180 bricks, resolving the housing shortage of 264,000 units would require 1.4 billion bricks.
While house prices are impacted by numerous macroeconomic factors, they are fundamentally driven by the supply and demand of housing units. The shortage of homes has led to sharp house price appreciation and prevented many prospective buyers from getting onto the property ladder.
The impact of Brexit could significantly worsen the issue. In 2015, 85 per cent of all imported clay and cement (primary brick components) came from the EU, and so depending on how trade negotiations develop, Brexit could have a considerable impact on supply.
However, the Brick Development Association has hit back at the report and claimed it is based on out-of-date figures and potentially damaging to the industry. Andrew Eagles, CEO of the BDA, commented: “This is a lazy analysis. The BDA represents 99% of the brick manufacturers in the UK. We can report with absolute authority that there is no shortage.
"There has been a significant increase in brick production over the last 15 months and this is confirmed by the ONS statistics. The Construction Products Association, Builders Merchants Federation and major house builders also confirm that they have not seen any issues with brick supply in the last year.
"The report for the NAEA citing a brick shortage is based on data from April 2015. This is 15 months out of date. It is misleading and damaging for the brick and construction industry."
The Cebr report states brick stock steadily declined between 2008 and 2013 and only partially recovered in 2014 and 2015. Two-thirds of small and medium-sized construction businesses faced a two-month wait for new brick orders last year, with almost a quarter waiting for up to four months and one in six (16 per cent) waiting six to eight months.4 This can partially be explained by the slowdown in building following the recession.
Mark Hayward, Managing Director, National Association of Estate Agents (NAEA) comments: “We all know that the massive lack of supply in housing is an issue that needs resolving urgently. As well as freeing up more land to ensure we can build the right sort of houses in the right places, it’s crucial we have the right materials and skills to do so. It seems a simple consideration but the fact that we don’t have enough bricks to meet demand has a very real effect and holds up the process from beginning to end. We’re concerned that the impact of the EU Referendum means this problem could get worse as we rely on the import of brick components from the EU and of course many of our skilled labourers come from there too.”
But Andrew Eagles of the BDA said the challenges the brick industry faced in 2014 when there was a dramatic increase in housebuilding are now behind us and the industry is confident it can meet the growing demand for its products in housing and other construction projects.
"Indeed, in the second quarter of 2016, deliveries have been 10.4% higher than in the first quarter," he added. "The deliveries in June are also 7.4% higher than the figure predicted in May. These changes are significant and point to the increased demand for bricks in the housing market, and other sectors.
"Notably, these results correlate with recent positive news in the housebuilding industry. 41,222 new homes were built in the UK in Q2, which is a 1% increase on the same period in 2015. Most importantly, this is also the highest number of houses built since Q4 of 2007.
"The kilns are fired up across the UK and the BDA looks forward to making their contribution to addressing the chronic housing shortage that has built up over recent decades. The re-openings and development of new brick plants are already incredibly positive signs in the revitalisation of the housebuilding sector.
"We should take positively from the news that new-build housing has risen, and should continue to rise over the next year as more focus is directed towards the current housing situation."
