An Architect's Guide | The Increase of Building Costs
Mattinson Associates Architects on the Isle of Wight have explained why the cost of building has increased throughout the pandemic.Timber, bricks, steel and cement are four very important commodities used within construction, and fluctuations in their prices can significantly impact architecture. In just 12 months, the price of processed timber has increased by an incredible 350% and a pallet of 2x4 has reached a record price of £1182. To put that into context, in the last 20 years, this cost has typically fluctuated from around £150 to £300. (Source - Global Timber Prices) . The main elements driving these record prices are shortening supply and increasing demand.
Shortened supply:
Worldwide supplies were pressured and import taxes increased to reduce ‘timber miles’. Timber imports have since dipped and prices have fluctuated heavily. Early 2018 saw timber prices rising to around £500 a pallet but swiftly dropping back down again. In turn, this saw the closure of several sawmills. Whilst many countries dropped these import taxes significantly at the start of the Covid-19 pandemic, the combination of supply issues and lack of labour saw the timber market become even more volatile - the efforts to improve the market were unfortunately too late.
An increasing demand:
The covid-19 pandemic saw an unpredicted ‘boom’ in the housing market, increasing the need for building materials. Global lockdowns created an unusual turn of events where savings grew, interest rates rose, the stamp duty holiday extended and delays in purchasing caused a bottleneck in the housing market. With a significant portion of people on furlough or working from home, the public found themselves living a new lifestyle with more time and money for DIY home improvements.
Brexit:
Brexit can certainly be blamed for causing many supply chain issues and increased costs. When the UK was part of the European Union’s customs union, goods and products could cross borders freely, without import taxes being charged. However, this has changed significantly as new legislation falls into place. In a post-Brexit world, customs charges have increased significantly. With so much more administrative work, someone will be forced to pay for it, and unfortunately, it works its way down to the consumer to be forking out these extra costs. On top of this, many EU based suppliers are becoming more reluctant to ship to the UK due to tax changes that came into force in early 2020. For example, the DutchBikeBits Co have said on their website “We are forced by British policy to stop dealing with British customers”. At the same time as this, international shipping companies announced they are beginning to levy further charges on shipping to and from the UK. Companies such as FedEx have said that it has been done to reflect the further administrative costs of navigating the UK border which may in turn cause delays. In hopes of being prepared for months and possibly years to come, many suppliers are stockpiling materials, products and many other things, which has caused such an irregular flow of demand that many suppliers and factories are struggling to keep up with, causing further congestion in the supply chain. While early studies suggest that the worst of Brexit's supply palaver seems to have happened, we won't know for years to come just how large the effects of Brexit may be.
To put these cost rises into perspective, in May 2010 £35,000 would have bought you enough timber to build almost 13 homes. However, just 11 years later as of May 2021, the same £35,000 would build just over two homes - an 83% decline. Whilst most of this cost is passed down to the consumer, homebuilders are unable to start any further projects due to these extremely tight supplies.If you're looking to build on the Isle of Wight and need an Architect or want to know more about the rise in building cost - Contact us.