What affects the cost of construction materials?

Roofers Leeds • June 18, 2022

Over the past two years we have seen construction material costs skyrocket in the UK. Now with the war in Ukraine and spiralling inflation, the cost of most products is at an all-time high. Building contractors and developers, along with homeowners who need work on their properties have been hit hard by the rising cost of materials.


This first became an issue during the height of the Covid-19 pandemic, which impacted on manufacturing, transport, and shipping and just as a provisional recuperation was in progress, the impact of the Russian conquest of Ukraine and escalating energy prices have triggered further rises.

Another factor affecting rising costs is the building materials shortage seen all throughout 2021. Plaster and timber deficiencies were particularly prevalent across the UK, and supply chain issues for those working on home renovations were detrimental. In January 2022, the CLC (Construction Leadership Council) stated that the construction industry was finally recovering from the effects of 2021 and were no longer suffering a high-level demand of these materials and there were no longer any shortages allowing the flow of goods to move freely through ports. However, the surging energy prices which came into effect in April and the ongoing war between Russia and Ukraine has unquestionably started to overturn this growth.


Energy Prices

The construction sector is one of the largest consumers of energy after aviation, shipping and the chemical industry. Much energy is required to produce construction materials such as, concrete cement and bricks. Furthermore, many construction firms utilise a huge amount of gas in their energy mix when equated to other energy intensive divisions. The average energy bill in April rose by 54% which put a huge burden on the construction industry due to energy productions which includes steel, cement and concrete passing on the impact of higher prices. The cost of these energy concentrated commodities started to rise because of this new crisis. Additionally, the surge in the cost of raw materials which took place in March was the greatest in a six-month period which will ultimately restrict the accessibility of specific manufactured goods.


Supply & Demand

Supply and demand are the main force which makes construction pricing extremely sensitive. Slashing pricing is intrinsically risky and can compare to additional work for small reward. Therefore, when the demand for construction materials is high, the construction pricing increases to reduce this risk. However, when demand rises, contractors are keen to chase riskier projects at a decreased price to keep their firms moving forward.


Labour Costs

Construction is labour concentrated. It is impossible to hang pipes, lay blocks and pull wires without experienced and competent labour. Due to this, quite a large portion of the costs associated with building are governed by manual labour expenditure. As the qualified and trained resources decrease, wages start to rise in relation to demand. Additionally, in places where there is a higher cost of living, there is a higher demand and therefore the cost of construction will also be much higher.


Commodity Pricing

Another factor that influences the cost of construction materials is commodity pricing which plays a significant role in determining expenditure. When oil rates go down, so do petroleum-based goods. Examples of this are asphalt, roofing materials and insulation. When the oil rates go up, so does the price of these products. Similarly, when steel prices start to rise directly caused by new tariffs, the pricing of metal panels, pipes and joists increase as well.


Low Market Disruption

Markets that have swift growth and are rapidly expanding can have scarcities of qualified and trained construction crews and additionally the extent of manual labour to keep pace with. Ultimately, this leads to a false sense of security of demand for local resources that can quite easily drive pricing to position their capacity. Devoid of enlarged supply chains and nationwide suppliers, the local marketplace rating can considerably influence the conventional cost of a project when compared with the national average.


Which specific raw materials have been heavily affected?

A few of the materials which have been affected most by price increases over the past 2 years are listed below:

·       Timber

·       Cement

·       Roofing products

·       Steel

·       Bricks and blocks

·       Insulation

·       Aluminium

·       Electrical Products

·       Paints and coatings

·       Copper

·       Concrete


How to navigate through material shortages and rising prices

We would advise homeowners to plan, as far as you can in advance as it is absolutely crucial to ensure you aren’t caught out by deficiencies or the increase of pricing and costs. Work diligently with suppliers and distributors and convey early your needs and requirements. It is also prudent to get your contractor booked early, as many reputable firms are taking bookings up to a year in advance.

To discuss the requirements of your home renovation project, get in touch with Roofers Leeds today.

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