A third of small building firms say that soaring material prices are squeezing their margins with almost a quarter having had to pass these price increases onto consumers, according to the Federation of Master Builders (FMB).
Construction SMEs have reported a range of material price increases since the depreciation of sterling following the EU referendum in June 2016. Small building firms were asked which materials have increased the most and the results, in order, were as follows:
The FMB's research found that 85% of builders think material price rises could drive consumers to hire rogue traders in an effort to save money on their building projects.
Approximately one-third of construction SMEs have had their margins squeezed as a result, with almost one-quarter having been forced to pass material price increases onto their clients, making projects more expensive for consumers.
More than one-in-10 builders report making losses on their building projects due to these material price increases.
Brian Berry, Chief Executive of the FMB, said: "Material price increases have left builders under severe pressure. This research shows that following the fall in the exchange rate, timber is the material that the majority of builders say has increased most in price but the problem doesn't end there. A third of builders report that these price increases are eating into their already razor-thin margins – and this on top of increased wages and salaries stemming from long-term construction skills shortages."
Brian concluded: "Material price spikes aren't just a problem for builders – they're also a problem for the homeowner, with almost one quarter of builders saying they have had to pass on price increases to their clients. This means that building projects now cost significantly more than they did this time last year.
"What with stagnant wages and price inflation across the economy, consumers are feeling the pinch and it might be that they decide not to commission that loft conversion or extension after all. Or worse still, 85% of builders believe that home owners will be tempted to hire rogue traders who are quoting a lower price than a professional building firm such as those that belong to the FMB. If that's the case, material price rises could lead to a flurry of botched jobs and distressed consumers. We're calling on homeowners to hold their nerve – they're better off commissioning a more modest project from a professional builder than a high spec project from a cowboy."
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