Is 2022 a Good Time to Build a House in Scotland?

A shortage of construction materials saw prices hit a 40 year high in 2021. Will the trend continue in 2022? And what could it mean for your project?

If you’re a prospective client planning a custom home, you may have heard about the UK construction industry being hit by a ‘perfect storm’ of material shortages and price rises.

The cost of materials caused prices for new build homes to increase by 22.6% in October 2021 compared to one year prior.[1]

That’s a lot of extra money to find when budgeting to build and it may leave you wondering, ‘Is now the right time?’

There’s no denying 2021 has been a challenging year and the Coldwells team, like all professional builders, have rallied and adapted to proactively serve our clients in this ever-changing climate.

As we enter 2022, the big question is whether material shortages will continue, and if so, what effects could it have on your project and how do we manage and mitigate those?

P3
P2

What caused the material shortages in 2021?

Material shortages can be in part traced back to the beginning of the Covid-19 pandemic, which forced factory shutdowns and disrupted the production of building materials.

Record global demand for materials also contributed to the shortage. Demand was particularly high in China and the US and these countries were prepared to pay more to get their hands on products, leaving less to go around for other countries.

A surge in UK housebuilding, import and export delays linked to Brexit and a shortage of 100,000 UK lorry drivers to transport goods further exacerbated the supply chain bottleneck.

P9
P10

Why did material prices rise in 2021 and what is the forecast for 2022?

Globally, the demand for materials was much higher than the rate at which it could be produced, making it difficult for manufacturers and suppliers to build up their stock levels and for builders to buy what they need. Prices increased due to demand and lengthening lead times.

Products used in housebuilding and domestic improvement were hardest hit by price rises.

In the Materials Cost Index below, between January and September 2021 the greatest increases can be seen in timber and steel, with significant increases in cement, bricks and roof tiles.

Construction Materials Price Movement 2021

Heading into 2022, there is an improvement in the supply situation across the UK, which has taken some pressure off prices.

However, some material shortages are likely to continue in 2022. The Construction Leadership Council (CLC) anticipates the return of pressure on supply chains as construction activity in the UK remains strong in 2022, with longer lead times and further price increases expected. [2]


Will 2022 be a good year to build a home?

Don’t wait. Now is the time to design and build your own home and it will put you a step ahead of what’s to come.

Prices for existing properties in Scotland continue to rise and are forecast to be 20% higher by 2024. [3] Buyers are currently spending thousands more than the asking price for existing homes.

Construction labour rates are increasing, driven by a severe skills shortage. The Federation of Master Builders reported 53% of UK builders struggled to hire joiners and 47% struggled to hire bricklayers in 2021. [4] This is expected to worsen in the coming years, with reduced immigration and an ageing workforce. [5]

So, looking ahead:

Material price rises + house price rises + labour price rises = the sooner you’re able to decide that building a home is the right choice for you, the less investment you will have to make.

Don’t try to time the market for lower prices, it’s a false economy. The sooner you build your new home, the sooner you have built in equity.

Commencing the design process now will ensure that your goal of moving into your new home in 2022 can be achieved. This stage can take a number of months working collaboratively with the builder and designer to get the house design you want.

P6
P7

How will Coldwells manage material shortages and price rises?

Extended lead times for materials mean it’s possible your home will take a little longer to build than normal. The Federation of Master Builders  reported 82% of UK builders had to delay projects in 2021 due to material shortages. [6] While the Coldwells team always aim to complete a project within an agreed timeframe, in this current climate, it’s sensible to schedule in some buffer time.

Our company director, Ross Booth, is receiving weekly price updates from our suppliers and he will communicate your project’s requirements to them well ahead of time.

To avoid any shortages or inflated costs, we will bulk order materials for your project as far in advance as possible. Deposits may be requested to reserve materials and lock in favourable prices.

If certain materials or products aren’t available for your project, we’ll utilise our experience and existing connections to investigate suitable alternatives.

We understand our clients want price certainty before a project begins. For added protection, we use estimating software to prepare our quotes and this integrates live pricing from our suppliers. It also takes into account price increases that are known to be occurring or those that might happen in the next 30 days.

Be careful not to compromise on quality and customer service by defaulting to a cheap quote or quicker completion time. Prices that are unusually low are likely too good to be true.

Like all professional builders, we’ve had to insert some flexibility into our building contracts to manage these uncertain times. A change clause explains that your project price could – and may have to – change once it has started. Together we can agree how we will change the materials, works and services if this is required.

Above all, regular communication will be essential to the smooth running of your project. To complement weekly site meetings, our online client portal will allow you to login and track progress of your build in real time. We publish daily job schedules, budget tracking and site photos, so you fully understand what stage your project is at.

In the current climate, you’re more protected working with a small family builder such as Coldwells, where only a few projects are managed at a time. We have the ability and the time to personally help our clients explore all their options.

As experienced award-winning contractors, we’re here to guide and support you through every step of the building process. Get in touch to arrange a time to discuss your new home in 2022.

Phone us on 01975223011 or email hello@coldwellsbuilding.com

 

Sources:

[1] Monthly Statistics of Building Materials, Department for Business, Energy & Industrial Strategy

[2] CLC Construction Product Availability Statement

[3] Federation of Master Builders State of Trade Survey Q3 2021

[4] Hamptons Sales Market Forecast

[5] A Homeowner’s Guide to the Materials Shortage, Federation of Master Builders

[6] Construction Industry Faces a Titanic Struggle for Skills

Editors note: This article was last updated March 16, 2022

Share ↷