Shortage of bricks contributing to housing crisis

Posted 26 August 2016 by Ben Salisbury

A shortage of bricks and a lack of skilled workers are contributing to the rise in house prices in the UK and the imbalance between demand and supply...

There are a variety of reasons put forward for the shortage of new homes being built in the UK, from difficulties in getting planning permission to a lack of skilled labour, but new research puts the blame on a fundamental aspect; a shortage of bricks.

A report by the National Association of Estate Agents (NAEA) produced with the Centre for Economic Business Research (CEBR) concludes that the lack of bricks is a significant factor contributing to the rise in house prices and that without more bricks, specifically 1.4 billion new bricks, the housing crisis cannot be fixed.

The Bricks Report says that the willingness of contractor’s post-Brexit to build the 264,000 new homes needed to be supplied to meet demand, the shortage of brick supply has been a factor in the increase of house prices.

Mark Hayward, managing director, National Association of Estate Agents (NAEA) says: “We all know that the massive lack of supply in housing is an issue that needs resolving urgently.

“It seems a simple consideration but the fact that we don’t have enough bricks to meet demand has a very real effect and holds up the process from beginning to end. We’re concerned that the impact of the EU Referendum means this problem could get worse as we rely on the import of brick components from the EU and of course many of our skilled labourers come from there too.”

The rise in demand

Between 2006 and 2016, the UK population grew strongly, leading to a rise in demand for new homes that has not been met by supply during the period, leading to a shortage of 264,000 new homes. The report says that the average UK home is made up of 5,180 bricks, so resolving the housing crisis would need 1.4 billion bricks, equivalent to building 740 Big Bens or 40 Tower Bridges’.

The report says that changes in house prices are driven by the supply and demand of housing units and that the shortage of homes has led to sharp house price appreciation, preventing many potential homeowners from getting a foot onto the property ladder.

It warns that the impact of Brexit could make the issue worse because 85% of all imported clay and cement, the primary components of bricks, come from the EU, so depending on how trade negotiations go, Brexit could impact on the supply of these vital components of bricks.

The extent of the brick shortage

The report says brick stocks fell between 2008 and 2013 and only partially recovered in 2014 and 2015, with the majority of small and medium-sized businesses having a two month wait for new brick orders in 2015, almost a quarter waiting for up to four months and 16% waiting for six to eight months.

The shortage is an issue even though the average size of new UK homes has almost halved since the 1920’s, down from an average of 153m2 to 83m2 now. The report says this is partly because UK homeowners now have smaller families, so less space is needed and also the massive increase in house prices means we can’t afford bigger properties.

In just the last 10 years, the average UK home has shrunk by 9% or 228 bricks, down from 91m2, but even so there are not enough to meet demand.

Skills shortage

The report also warns that the Brexit vote could leave UK housebuilders’ short of skilled labour. A lack of skilled UK workers was caused by workers choosing other career paths during the recession and not choosing to return to construction when the recession ended. This skill shortage could potentially be exacerbated by greater restrictions on foreign workers ability to come into the UK to work

“We need investment in the sector to boost production, and housebuilding needs an image overhaul, to become a more attractive career prospect for school leavers and graduates,” added Hayward.

“Until this is addressed, we might as well resign ourselves to a life time of astronomical prices and falling levels of homeownership.”

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