The past four years have continued to push against the boundaries of what the industry once perceived to be normal. From the pandemic to the war in Ukraine and most recently, the outbreak of conflict in the Middle East, the period has been marked by a series of unforeseen geopolitical events that continue to impact the wider economy and the construction sector.
Although there have been signs of some normality returning to the industry – with materials price rises abating in 2023 – prices for many construction goods remain at historically high levels. Labour costs have now replaced materials as the biggest cost driver, with the latest figures from ONS’s Average Weekly Earnings dataset showing that construction wages increased by 5.7% in the year to September 2023.
As if this wasn’t enough to contend with, the Bank Rate has leapt from almost zero (0.1%) to 5.25% over the past two years, which has also contributed to the downturn in construction demand, especially within the housing sector. Yet, despite these varying pressures, the construction industry continues to remain relatively buoyant, with the latest output figures showing a slight overall increase, thanks to growth in repair and maintenance output. But can the industry ever expect to see stability return to construction prices, or is it time we resigned ourselves to the fact that construction inflation is just another new normal?
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