The Crystal Ball

Tarmac’s Dr BIll Price gets his crystal ball out to ponder what the future might bring

It’s the start of another year and the grim reaper has seen fit to spare me yet again (he said with a smile). So it’s time for the usual game of trying to predict what the new year will bring.

Predicting the future is going to be even more difficult than usual, with a new President in the White House and the possibility of Article 50 being triggered in the spring, and that is even without taking into account the effects of the Great British Weather that can always throw in a curve ball or two.

Let’s look at housing, as this is a sector that often drives sales of building materials. The indications are generally that house prices, will continue to grow throughout 2017 typically expected to be in the region 2% to 5% over the year. It is possible however, that prices may slow in the somewhat volatile London and South East market.  There are also worries that in some areas, prices are reaching the limit of affordability. What effect will this have on new house-building?

It is clearly recognised that the UK as a whole needs to build more homes than we are building currently in order to satisfy demand, and rising prices perhaps reflect this underperformance. A healthy housing market should translate into increased sales for Builders Merchants, but if affordability is in question, home improvements and even increased levels of DIY may well  be favoured over new build.

However, recent government announcements have indicated that significant funding will be released in order to stimulate increased house building and in particular, affordable housing. Will this pledge actually translate into bricks and mortar getting out of the ground (n.b. other construction techniques are available!), who knows? But this is a positive development.

At present, the crystal ball is still clouded, but the pent up demand for affordable new housing cannot be resisted indefinitely and Merchants need to keep a weather eye on developments in order to be well placed to reap the benefits of any upturn.

Have a happy and profitable new year!