Length of PCSAs, regulatory delays, investor worries and falling consumer confidence all cited as reasons for downbeat update

The first update of the new year from the Construction Leadership Council’s material supply chain group has warned the ongoing weakness of the housing sector will continue to act as a drag on construction’s recovery.

The update, written by John Newcomb, chief executive of the Builders Merchants Federation and Peter Caplehorn, chief executive of the Construction Products Association, co-chairs of the CLC’s materials group, admitted the bulletin “is notable for its bleak assessment of market prospects”.

It added: “While large infrastructure schemes, including the prison programme, are progressing, this alone cannot offset the weakness in housing, where the government’s flagship commitment to deliver 1.5 million new homes remains far off track, hindered by planning capacity issues, regulatory delays and weak investor confidence.”

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Materials firms have said workloads are being hampered by a variety of headwinds including planning delays, brittle consumer confidence and nervous investors

It said there were “no notable product availability issues, and, unsurprisingly, in the current market, supply often exceeds demand.

“For example, brick manufacturers who invested in capacity when the government announced its housing ambition now hold large stock levels. While they are well-placed for an eventual recovery, given the subdued demand, they are reassessing how much production to maintain.”

It said concrete order volumes were down by 28% over the past four years. “London, usually the busiest market, has experienced a 39% decline in the last two years,” it added.

The update said materials firms could not easily restart mothballed sites to meet any uptick in capacity. “[It] is neither quick nor straightforward. The longer the market remains stagnant, the concern shifts from near-term impacts to longer-term consequences and risks.”

And it said familiar problems were continuing to dog the sector. “Delayed investment decisions, increased client caution, ongoing economic volatility and a lack of consumer confidence have all contributed to a notable drop in new orders.

“Timing presents another challenge. Although some major projects have technically commenced, the physical build phase lags behind the planning and agreement stages. The significant extension of PCSA periods across many schemes is especially worrying for major contractors, where longer timelines mean projects take more time to complete, delaying revenues.”