The latest Building Materials Forecast Report from the Builders Merchants Federation (BMF) predicts collective sales revenue to fall 2.2% in the first quarter of 2024, compared to Q1 2023, before improving to show growth of just 0.4% for the year as a whole.
However, 0.4% growth in 2024 will do little to recapture lost ground, following a 3.5% decline in merchant sales in 2023.
Even with growth improving to 1% in 2025, according to forecasts, it will be several years before sales return to 2022 levels.
BMF chief executive John Newcomb said: “Fourteen interest rate rises alongside the effects of a cost-of-living crisis have taken their toll both on consumer confidence and the new house-building market for well over a year, we have seen both volume and value sales through builders’ merchants fall during 2023.
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“This mirrors much of what has been observed in the wider UK economy and its impact on the housing market, where new housebuilding registrations have plummeted to their lowest levels since the start of the pandemic and close to levels last seen in 2009. Against this background, we are unlikely to see a dramatic upturn in 2024, but we are cautiously optimistic that we will see the first signs of recovery.”
BMF economist Thomas Lowe added: “In addition to the slowdown in new house-building, the current burden on household finances means repair, maintenance and improvement work (RMI) has been competing with other priorities for consumers’ cash. This has resulted in households postponing larger scale RMI projects. However, the data shows evidence of lightside RMI projects remaining relatively strong with all lightside categories seeing year on year value growth in the recent quarter, providing one ray of light within a pretty gloomy picture overall.
“While market conditions are expected to remain volatile, arguably the long-term economic health of the merchanting sector is improving. As net inflation of building materials settles faster than the macroeconomic picture, this may allow for a faster recovery once consumption starts to pick up again as pressures on household disposable income start to alleviate.”
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