8 INDUSTRY NEWS
Knight Frank highlights undersupply of retirement housing
Material prices continue to soar, FMB report finds
More than half of small building firms say that material prices are squeezing their margins, and have had to pass these price increases onto consumers, according to the latest research by the Federation of Master Builders (FMB). SME building firms were asked which
materials are in shortest supply and have the longest wait times. The average results were as follows (in order of longest to shortest wait times): • Bricks were in shortest supply with the longest reported wait time being more than one year • Roof tiles were second with the longest reported wait time being up to six months • Insulation was third with the longest reported wait time being up to four months • Slate – fourth with the longest reported wait time being up to six months • Windows in fifth with the longest reported wait time being more than one year • Blocks were sixth with the longest reported wait time being up to four months • Porcelain products were seventh with the longest reported wait time being more than one year • Plasterboard was eighth with the longest reported wait time being up to two months • Timber was ninth with the longest reported wait time being up to two months • Boilers were tenth, with the longest reported wait time being more than one year. SME building firms were also asked by
what percentage different materials have increased over the past 12 months. On average, the following rises were reported: • Insulation increased by 16 per cent • Bricks increased by 9 per cent • Timber increased by 8 per cent
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• Roof tiles increased by 8 per cent • Slate increased by 8 per cent • Windows increased by 7 per cent • Blocks increased by 7 per cent • Plasterboard increased by 7 per cent • Boilers increased by 7 per cent • Porcelain products increased by 6 per cent
The impact of these material price increases, according to the report, includes the fact that more than half of construction SMEs (56 per cent) have had their margins squeezed, this has gone up from one third (32 per cent) reporting this in July 2017. Half of firms (49 per cent) have been
forced to pass material price increases onto their clients, making building projects more expensive for consumers, this has gone up from less than one quarter (22 per cent) reporting this in July 2017. A third of firms (30 per cent) have
recommended that clients use alternative materials or products to those originally specified, and this has gone up from one in ten reporting this in July 2017. Nearly one fifth (17 per cent) of builders
report making losses on their building projects due to material price increases, this has gone up from one in 10 reporting this in July 2017. Brian Berry, chief executive of the FMB,
commented: “Material prices have rocketed over the past year. The reason for this could include the impact of the depre- ciation of sterling following the EU referendum still feeding through. High demand due to buoyant international markets could also be contributing to price increases. “What’s particularly worrying is
that when prices have increased mid-project, almost one fifth of builders have absorbed the increase and therefore made a loss.”
The current stock levels of retirement housing and projected demographic changes highlight a critical undersupply of age-appropriate homes, says Knight Frank. In its latest report, The Case for Retirement Housing, the firm assessed the drivers of this ‘imminent crisis’. According to the report, there are currently 11.8 million people in the UK over the age of 65, which is forecast to rise by 20 per cent over the next decade. This means that the time spend in retirement will also lengthen, underpinning the crucial need for retirement housing.
The gap between the potential pool of demand and current supply is reportedly stark. Present stock, from aged-restricted over-55s housing to housing with care, comprises 725,000 homes, which equates to just 2.6 per cent of the total housing stock in the UK.
Some 25 per cent of over-55s would consider downsizing or moving into some sort of retirement accommodation, says Knight Frank. If this is applied to the over-65s, with 25 per cent choosing retirement housing over the next decade, there is potential demand from 582,283 additional individuals. Tom Scaife, head of retirement housing at Knight Frank, commented: “With increased awareness of the benefits of retirement housing, clarity at the planning stage, and some much needed incentives, retirement housing can be delivered at scale and help to tackle the social care and housing crisis in one go.”
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