£40k-a-year brickies, labour shortages, surging building materials
imports and stretching delivery times. It all sounds like a bubble. Two
housebuilders, Galliford Try and Crest Nicholson - both led by sagacious and candid
chief executives - were both expansive on the issue during their Stock Market
updates yesterday, despite the majority of their peers refusing to say the “B”
word.
Bricklayers’ pay has surged by 20% in a mere six months, according
to Galliford, while Crest said bricks, tiles and blocks were taking twice as
long to deliver. “There’s a bit of a panic in the industry around bricks and the
supply of insulation blocks, “ GT’s Greg Fitzgerald told today’s FT, while
Crest’s Stephen Stone said his supply chain was “struggling to cope”.
This may temper - but far from cancel out - margin growth over
the next couple of years, since the undoubted cause of the pressures, Help to
Buy, will push up house prices while the three year scheme steams on. But
labour and material pressures are likely to leech out into other building
sectors and possibly impact the feasibility of commercial and other projects.
From a housebuilding perspective, however, it might help on a
tricky political issue. The government expects the builders to expand housing
production far more than they privately intend. The travails of the planning
system remains the “prebuttal” of choice in advance of what is likely to become
increasingly intense scrutiny. Now they can add supply problems. “Thank
goodness we’re not looking to increase supply too much but more on increasing
revenue,” Fitzgerald, perhaps unguardedly, let slip to the Pink Paper.
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