The Rising Prices of Construction Materials - Timber
1997 - Present: Rising Construction Activity
Reported by the Timber Trade Federation (TTF), since 1997, overall construction activity has expanded at a fast rate. UK sales alone in Q1 of 2020 were up 30.5% compared to 2019.
January 2020: BREXIT
With most timber for construction in the UK imported, the Royal Institute of Chartered Surveyors (RICS) reported that “the world demand is exceeding supply. The Timber Trade Federation currently suggests that UK demand will outweigh supply in 2021.”
Prices rose sharply following the UK’s exit from the EU, due to increased administration, shipping costs, and temporary surcharges.
March 2020: COVID-19
Despite key workers globally remaining operational during lockdowns, the surge in home renovations and restrictive production capabilities resulted in materials shortages and the inability to meet demand.
In the US alone, the price of lumber per thousand board feet rose from US$400 in February 2020 to an all-time high of over US$1,600 in May 2020. Prices have since fallen to around US$800.
RICS commented: “Despite the overall optimism, rising material costs have been highlighted [...] this trend is being seen across the globe, with the pressures intensifying going forward due to bottlenecks in the supply chain and an upsurge in demand continuing to drive costs higher.”
September 2020: Skills Shortages
What appears to have started as an issue for the UK, has spread to other countries in Europe. Currently the UK has an estimated shortage of 100,000 HGV drivers, with a backlog of around 54,000 waiting to take their tests.
Meanwhile Poland has a shortage of 124,000; Germany between 45,000 and 60,000; France 43,000; Italy 15,000; Spain 15,000; and Scandinavia 10,000.
November 2021 and Beyond: Prices Decreasing?
While the US is starting to see a decline in timber prices, Japan continues to face lumber shortages and high prices, alongside the UK, Europe, Australia and Russia.
Will the industry recover? Time will tell, but current predictions expect the shortages and high prices to continue well into 2023.
