Housebuilders costs rose 1.3% in 4Q2020 and by 2.7% when compared to the same quarter last year according to the BCIS Private Housing Construction Price Index (PHCPI).
Housing construction output grew by 6.7% in 4Q2020 compared to previous quarter but remains down by 5.1% on the annual basis.
More than a half of contributors to this quarter’s survey indicated a change in costs. Of those, 72% stated increases in cost of materials, 21% in cost of labour while 7.0% indicated changes in both labour and material costs.
Timber and timber products as well as steel, concrete and insulation remain among the key cost pressures mentioned by respondents. Pressures on labour element were arising mainly due to an increased rate of confirmed COVID-19 cases on sites and self-isolation required.
Respondents to the survey expect their costs to continue to rise in the 1st quarter of 2021 by a further 1.8%.
Coronavirus (COVID-19) continues to create risks and challenges for businesses across the construction industry and the wider economy. The key factors affecting business operations in the fourth quarter as specified by the respondents were:
- material availability (32%)
- supply chain delays and labour availability (24% each)
- reduced productivity (13%) and
- delay in sales (4%)
On site productivity remained largely unchanged for companies across the sector. Respondents to the survey noted that on average, productivity in October, November and December compared with the levels pre-COVID-19 lockdown, stood at 90%, 90% and 88% respectively, compared to 90% in September.
When asked about productivity once revised working practices are established, respondents expect productivity to range between 70% and 105%, at an average of 93% (as a % of pre-COVID-19).
Looking ahead, labour and material availability, changes to the Stamp Duty and Help to Buy scheme as well as material price increases are perceived to be biggest challenges in 2021 by respondents.
