_Template: Market Report

The war in Iran has had a significant impact on the UK construction industry, mainly through rising energy prices, supply chain disruption, and increasing material costs.

Construction is dependent on energy intensive materials, e.g. steel, cement, glass, aluminium, and bricks. As gas and electricity prices increase, manufacturers face higher production costs which are passed on to contractors and thus, developers.

The conflict has also disrupted international shipping and logistics with increased insurance costs for cargo vessels and delays in global trade routes, particularly through the Strait of Hormuz. This has slowed deliveries of imported materials to the UK which has caused project delays, extended lead times, and unwillingness to fix prices.

These impacts have resulted in the UK construction industry becoming more apprehensive about taking on new projects with contractors becoming more risk averse and taking greater care when entering into fixed price contracts due to these volatile and unpredictable costs.

The inflationary pressure on the construction sector has also weakened investor confidence and limited the government’s ability to hit housing and infrastructure targets. These impacts have resulted in the UK construction industry becoming more apprehensive about taking on new projects with contractors becoming more risk adverse and taking greater care when entering into fixed price contracts due to these volatile and unpredictable costs.

It is yet to be seen if recent price changes driven from conflict derived impact will subside following the ceasefire in the region.