UK property developers are facing a supply crisis with a serious shortage of bricks
According to the National Association of Estate Agents; the supply of bricks is diminishing in comparison to the rate of housing projects needing to be built. There has always been a high demand for bricks and the housing industry has always required the industry to maintain supply levels in response to the needs of the developers.
1.4 billion bricks are required right now to deal with the current housing shortage here in the UK, approximately 264,000 homes. With such an undersupply it is of no surprise that house prices are continuing to rise.
Extra pressure has now been put on developers since some 85% of bricks are imported from the EU to the UK at present. With the recent referendum deciding that the United Kingdom is to leave the EU (Brexit), there are calls to increase production of bricks here in the UK.
Depending on trade negotiations and tariffs agreed, we could see considerable issues in terms of where and whom is supplying bricks to our developers moving forwards after Brexit is enacted.
On average developers are having to wait anywhere between two to four months for delivery of bricks from the point of order. Although houses are being built much smaller we still have supply issues. In the 1920’s the average home was 153 m2 and now in 2016 it is just 83 m2 meaning homes have gotten 46% smaller in the last 100 years.
With house prices increasing at record rates, home buyers are in turn having to settle for less for their money. It is said that the average new home requires some 5,180 bricks.
Young buyers are having great difficulties getting on the housing ladder, we are seeing families outgrow the homes that they live within. These families are then in the unfortunate position of having to remain in these homes due to the astronomical prices of properties. What we really need is significant investment in the production aspect of housebuilding.
We also need to see investment in skills, since construction based jobs are decreasing in popularity. With the slowdown in housebuilding during the recession we saw a growing number seek alternative employment, not to return once the slowdown was over.
If we don’t have enough materials and skills, it will have a negative impact on the end goal of supplying enough homes to match the demand. The whole process is slowed and ultimately does not look good for meeting housebuilding targets.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas, such as the Bar Works investment.