How supply chain issues impact the housing market


While the sudden onset of the COVID-19 pandemic wreaked havoc and disruption on a wide range of industries, few sectors were as negatively impacted as the construction and housebuilding markets. With manpower shortages, increased demand, manufacturer backlogs and logistical restrictions leading to global supply chain issues, what’s the current state of the UK housing market and when can prospective buyers and construction companies expect to see the supply chain return to normal?   

The current state of the UK housing market – While the UK housing market has long been viewed as turbulent and competitive, a perfect storm of factors has led to increasing demand and rising house prices. In England in the period 2020-2021, average house prices soared by 10.9% to £315,000, whereas prices in Scotland, Wales and Northern Ireland rose by 5.5%, 10.7% and 10.7% respectively.

The alarming state of the housing market has been attributed to factors including inflation, rising fuel and energy bills, mortgage rate upheavals, soaring demand and, most notably, COVID-related supply chain issues. Along with rising property prices, consumers may also now have to pay higher rates and fees for essential services, whether that be hiring conveyancing solicitors to deal with the legalities of moving or paying fuel, energy and utility bills to run their homes.

How supply chain issues are impacting the UK housing market – Soaring demand in the private housing market combined with supply chain issues has led to a considerable production backlog and macroeconomic climate in which new buyers may find it more costly to penetrate the market than ever. Because the construction and building industries rely on often long and complex supply chains (encompassing labour associated with the production and transportation of raw materials across multiple countries and continents), a weak link can be catastrophic and lead to considerable delays and subsequent backlogs. In the UK, the market is continuing to recover from the global supply chain issues both caused and exacerbated by a range of factors including the COVID-19 pandemic, inflation and the Russia-Ukraine conflict – more than 60% of UK housebuilding companies still cite supply chain issues as a disruptive factor and a direct cause of the current backlog.

How does 2023 look? – Although UK homeowners, prospective buyers and construction and housebuilding businesses may face a tougher market than ever, there’s certainly light at the end of the tunnel. With the easing of restrictions and pressure on public services, we’ve seen increased output and performance in the construction sector, which peaked in the second half of 2022. And with mortgage rates, interest rates and house prices stabilising slowly but surely in the UK, it’s only a matter of time before the market eases and prices fall to a rate of relative normalcy.