70% of builders hit by price increases
New research from the Federation of Master Builders has revealed that 70% of builders experienced a rise in prices caused by the tumbling pound.
Respondents to the FMB’s quarterly State of Trade Survey predicted that costs would rise even further, with increases of between 10 to 15% expected over the course of 2017.
The survey also cited SMEs within the construction industry reporting price rises of 22% in Spanish slate and 20% increase in timber.
Due to 25% of all construction materials being imported, the sector is particularly vulnerable to the sudden fluctuations in the strength of the pound.
Sarah McMonagle, Director of External Affairs at the FMB, said that the rising cost of the pound was a real test for the construction industry. She commented: “The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders.”
This could see a knock-on effect for home owners as the cost of their building projects begin to rise.
Ms McMonagle said: “It also means that consumer choice may be reduced as some home owners face having to compromise on aspects of their project due to the fact that certain materials have become too expensive. There is also an added headache for the builder, as material price rises can come at short notice and if they are mid-project, the original costing is no longer accurate.
“This makes pricing jobs problematic and leads to construction SMEs having to cover themselves against sudden price swings. Some builders are attempting to mitigate this by introducing larger contingency funds when pricing for a job, or by stipulating in the contract that the overall contract price will change in the case of material price hikes, making client budgeting more tricky.”
Last week the latest construction output figures from the Markit/CIPS UK Construction PMI painted a similar picture revealing that companies had noted the weaker sterling exchange rate had led to higher costs for a wide range of imported materials.
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