Post-pandemic Construction in the UK
As the UK economy, the war in Ukraine and Climate change continue to occupy the front pages, you could be forgiven for forgetting that less than 12 months ago the country was still battling the 2-year-long COVID-19 pandemic.
But, with the worst health crisis in living memory now in the rear-view mirror, just how well is the construction industry, specifically house-building, coping in picking up the pieces following the most turbulent of times?
The post-covid rebuild…
On 23rd March 2020, as the Prime Minister ordered the first national lockdown that any of us have ever experienced, the rug was pulled from beneath us all. But, whilst many industries carried on relatively ‘normally’ during the Covid-19 lockdowns, for weeks, an eerie silence fell upon building sites up and down the country.
For many workers, video calls and remote working allowed a near-seamless continuation of proceedings, whilst those in the construction industry were left trying to find a way to navigate the new safety rules implemented by the government and still undertake projects as they would have before.
This forced somewhat of a revolution within the industry, with new approaches needed to ensure that construction projects could be completed to not only the same standard as before, but in the safest way possible for all involved. New technologies from simple video calls through to complex data analysis and planning systems have been welcomed into the industry to remove some of the face-to-face dependence of years-past, whilst simultaneously improving the efficiency of operations. There has also been an intense focus on project management, with adaptations needed in order to stay on top of COVID-induced issues including material shortages, material costs, and of course new safety concerns.
As a result, construction companies are now more flexible, better equipped, and more efficient than before the pandemic. In broad terms, the UK construction industry is recovering well from the pandemic across most sectors, with output statistics in September 2022 being the highest monthly figure since records began in 2010, and 4% higher than February 2020, just before the first lockdown.
This is particularly impressive when considering the challenges currently faced by the industry. Since 2019 there has been a significant decline in the number of construction workers in the UK, estimated to be around 244,000, with one of the core contributors to this statistic being the fact that many workers are leaving the UK to return to the EU. This has resulted in a widespread skills shortage in the UK. Additionally, the average price of construction materials was over 24% higher in July 2022 than the same time last year, which is putting greater financial strain on businesses and consumers alike. This stemmed from the pandemic causing major logistical issues, delays, and huge price increases. Material cost prices have more recently been worsened by inflation, energy price increases, and the war in Ukraine, and without any apparent quick fixes, material costs could be set to be an issue for the foreseeable future.
But how has housing been affected post-COVID?
At the start of the pandemic, housing output declined considerably as projects were temporarily put on hold during the first lockdown period until safe procedures were put in place. Since then, the sector has recovered strongly, and private housing construction output was 10.3% higher in September 2022 than February 2020, showing considerable growth in this area. However, demand is far outweighing supply, particularly regarding affordable housing, while the government’s target of building 300,000 new homes per year is still a long way off from being realised.
The stamp duty holiday during the pandemic led to a wave of completions due to lower costs related to house purchases. The Covid-related surge in demand appeared to continue well after the end of the stamp duty holiday, but as the cost of living bites and interest-rates continue to rise, the coming months are somewhat less clear regarding house-building – whatever happens, demand for new houses remains exceptionally high.
Houses are not being built as fast as they need to be and this is largely down to the issues affecting the construction industry as a whole, namely supply issues, energy costs, and particularly worker shortages, which are hindering construction companies’ efforts. While materials are on the whole more available now than the last couple of years, the costs are still sky-high, and coupled with soaring energy prices, building is becoming more and more extortionate. A survey conducted by the British Chamber of Commerce in 2022 found that 83% of construction companies were struggling to recruit skilled workers to efficiently complete projects, and these factors combined mean that the construction of houses is not only hugely expensive, but also slow.
Additionally, green construction practices have become the norm for new buildings, homes and other projects, due to recently updated Building Regulations. In June 2022 changes came into effect which ruled that along with other adjustments, all new residential buildings must produce 30% less carbon emissions. See our Useful Resources page to learn more about how these changes affect you and how we can make sure your company’s project stays regulation compliant.
The new greener approach to construction, while great for the environment and a step towards a more sustainable future, provides just another level of complexity for construction firms and requires further adaptation after a challenging few years for the industry.
September 2022 4% higher construction output than Feb 2020 – ONS https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/bulletins/constructionoutputingreatbritain/september2022newordersandconstructionoutputpriceindicesjulytoseptember2022
September 2022 10.3% higher private housing output than Feb 2020 – ONS
244,000 Workers leaving between 2019-2022 – Financial Times
Construction material price increase – ONS via C-Link
Building regs changes – Stroma
300,000 homes target – BBC
83% of firms struggling to recruit – BCC via The Times