Help to Buy: Prices soar as demand for building materials increases

It is claimed that high-volume national housebuilders are able to use their purchasing clout to bulk buy what supplies remain

When George Osborne announced his Help to Buy scheme 16 months ago, it was hailed as the biggest boost to the housing market since Margaret Thatcher offered council tenants the right to purchase their own home. It was, said the Chancellor, a “great support for homebuilders”.

There was one small, yet crucial, component that Mr Osborne failed to factor into his construction boost: a crippling shortage of that most basic of building materials: the Great British brick.

According to many within the industry, builders – especially those outside the capital – are being told they must wait for nearly a year before bricks become available.

The boss of Michelmersh Brick, the UK’s largest listed manufacturer, has described stocks as being at “their lowest in living memory” while prices have soared by up to 20 per cent since January in some areas of the country.

Meanwhile, imports are up 60 per cent to fill the gap, with Britain bringing in a third of the national output of Belgium to keep hod carriers busy.

Calum Currie, managing director of Bricklink, one of the largest suppliers in Scotland and the North of England, said Britain was becoming a nation of brick-haves and have-nots.

“There is a constant shortage of supply and the further north you go, the worse the problem becomes. Most manufacturers have closed their order books this year and are on 40 weeks order time,” Mr Currie said.

“The national housebuilders are getting all the material. The social housing market is not getting it. These companies are being starved of products.”

It is claimed that high-volume national housebuilders are able to use their purchasing clout to bulk buy what supplies remain, while those with less market power are forced to rely on imports. This is having a serious knock-on effect for the smaller housing developers and contractors building schools, hospitals, social housing and shopping centres.

One of the main reasons behind the shortage is that dozens of brickworks were closed during the recession as demand plummeted and the housing market went into freefall.

Tougher new EU limits on sulphur dioxide emissions also resulted in the closure of kilns, including the historic ovens at Stewartby in Bedfordshire. The soaring cost of energy also put pressure on manufacturers, forcing a rash of closures and takeovers when recession struck.

David Cross, managing director of Coda Studios, a design and architectural practice in Sheffield and Leeds, found himself 10,000 bricks short on a recent housebuilding project and had to hunt around for bricks to finish the job. “It is a self-fulfilling prophecy. People are panic buying so people are stockpiling. It is a problem across the board,” he said.

But there is hope new kilns will address the problem as the number of new housing starts in the first quarter of 2014 rose 31 per cent on last year.

Dr Noble Francis, economics director of the Construction Products Association, insisted brick manufacturers have responded well to the dramatic increase in demand – with production 39 per cent higher in April 2014 than last year. He said housebuilders had got used to having bricks readily on tap during the recession but now had to adjust to rising demand which had yet to return to pre-recession levels.

“It has been difficult for the media to disentangle the rumour and anecdotal stories from reality and the actual picture,” he said. “Is there a shortage? No, this is the natural consequence of a rise in demand after five subdued years.”

Steve Turner, of the Home Builders Federation, said: “There is an understandable pressure on a whole host of building materials at the moment, including bricks, largely because of the significant increase we have seen in housebuilding activity of about 25 per cent since the introduction of Help to Buy.

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