The Construction Leadership Council (CLC) have published a message of cautious optimism ahead of 2025
The construction supply chain is facing many issues, including supply, fluctuations in demand, and concerns over the health of the housebuilding and home improvement sectors market health.
In spite of this, the CLC have issued their final statement of 2024 assuring that there is cause for optimism in the coming year.
Not all doom-and-gloom for the construction supply chain
The CLC cites that product availability has remained in good condition towards the end of the year, and that government reforms and the potential for the lessening of economic pressure are cause for hope.
The statement says that reported shortages of aerated blocks are still being managed, but the situation is likely to improve by the end of Q1 2025 after being tempered by a lack of demand in much of 2024.
The biggest source of optimism for 2025, however, comes from the reforms to the National Planning Policy Framework, likely to see more greenbelt land come into development and the stimulation of construction activity.
There is a slight caveat that the reforms are likely to help larger housebuilders more than SME’s, making it more difficult to capitalise on the new measures. Furthermore, the CLC is cautious about a true recovery until mortgage interest rates fall.
Key challenges remain
The statement also emphasises that there is still a need to ensure that sufficient resources are prepared to support an increase in development activity, should an increase come.
Due to lower demand over the recent year-and-a-half, capacity has been reduced, and with uncertainty on how quick a recovery in development will be, it is essential to ensure capacity can meet any coming challenges.
The home improvement market also still faces challenges, with sales of gas boilers plummeting after a decline in house sales and the consequent reduction in renovation work. Heat pumps have not risen enough to offset the drop of gas boilers.
Construction materials cost also remain a concern, with the CLC expecting a price rise between 3%-8% in January due to energy costs. There is no guarantee that the prices will not rise again in following months, putting strain on businesses already struggling with employment costs, especially SMEs.
The statement concludes: “Amid these challenges, the CLC has urged the construction industry to continue working closely with their supply chains to forecast and communicate material requirements well in advance. Ongoing collaboration and open communication between suppliers, distributors, and builders’ merchants will be vital in maintaining a healthy and productive construction industry.
“As the sector navigates these uncertainties, the Group remains hopeful that, with continued cooperation and a supportive policy environment, 2025 could mark the beginning of a more stable and sustained recovery for the UK construction industry.”
