Building costs rising faster than the buildings

BUILDING materials soared in price during 2021 as a huge spike in demand coincided with supply chain issues caused by Brexit and the pandemic.

This will impact hugely on the States’ ability to fund new housing for keyworkers and the 300 or so skilled migrants I referred to last week as our exchequer hopes to boost its tax take. This is in addition to addressing our neglected social housing and building affordable and entry-level housing for those taxpayers already in the island but mighty disillusioned about their housing prospects.

The private building sector will contribute where it can but the same overheads apply and its capability has been patently restricted by the flawed Island Development Plan for the past six years. There is little sign of this changing and yet building permission is being fast-tracked for the States-sponsored Guernsey Housing Association to build on adjoining sites respectively zoned under the IDP as a derelict vinery and a key industrial area. The latter is especially galling for the industrial businesses being evicted from the States-owned Fontaine vinery site also due to be developed by the GHA. All new developments but at what cost?

Year on year figures showed building materials as having increased by 23% in August, a staggering figure that could halt a large-scale development in course of construction. Timber and steel in particular were in short supply, leading to cost rises by as much as 74%.

Sourcing materials has also been a major problem and delayed many projects. Developers are having difficulty fixing prices and often quote figures with a proviso to revise the quote on a three-monthly basis.

The problem is slowly easing as supply begins to keep up with demand, however rising energy costs and rampant inflation will further exacerbate costs, which once increased rarely return to former levels in almost any consumer sector.

Transporting bulky and often heavy materials to the island has by necessity been a costly issue but the travails of island living are now impacting on labour resources. The highlighted lack of skilled workers in Guernsey already applies to the local building industry and will lead to higher wage incentives once the aforementioned developments finally get spades in the ground.

This is particularly critical for affordable housing, which is a complete misnomer. Building affordable housing is as costly as building anything else. Simpler finishes can be made but building houses is time consuming with countless components that require expertise from a range of skilled workers.

Long gone are the days when stone-built houses were commonplace at a time of extensive quarrying and a multitude of skilled yet relatively low-paid labour in Guernsey. Houses that have stood for centuries could still be built like that today but the cost is wholly unviable, even if the planners approved the plans.

Guernsey’s building inspectors within the States Planning Authority currently seem fixated about using heavy gauge steel for even minor extensions and conversions, not to mention new-builds. It appears to my unqualified eye and to others I’ve spoken to in the building trade as gross over-engineering at a time European steel prices have rocketed, reaching €1,400 per tonne in March 2022, up from €460 per tonne in 2020. Prices have steadied during the past month however still stand at between €720 and €800 per tonne.

The present cost to build a house in Guernsey (and do bear this in mind when renewing your home’s buildings insurance policy) is approximately £3,200 per square metre for a basic, let’s say conventional, build. That applies for each storey and includes the roof and foundation work, equating to very approximately £425,000 to build a modest three-bedroom bungalow, assuming you already own the site. The sky’s the limit if the specification, fixtures and fittings are upgraded. This does not include architects’ fees nor a building engineer’s report for all that steel the building inspectors are likely to insist upon.

Concrete blockwork has long been widespread as a building material and has many durable advantages, as discovered in Ancient Egypt when cement and an early form of concrete were first used. But its usage is gradual and labour intensive and although concrete blocks cause little harm to the environment the manufacturing process leaves behind hefty carbon footprints. The cement-making industry is responsible for about 8% of the world’s man-made CO2 emissions, according to the international journal Nature, third highest after transportation and energy generation. In the same way that building purely in stone is now out of the equation perhaps it’s time to find alternatives to the 20th-century convention of building houses in concrete.

We face a growing structural skills shortage as workers age and retire and Brexit will reduce access to European labour. Our housebuilding capacity will shrink unless modern methods using advanced technology improve productivity and completion timelines. Quality assurance also needs improving in a new-build market currently beset with chronic snagging issues.

Sweden for example has a proven tradition of using manufacturing techniques to build highly-efficient modular homes that have shaken off the legacy of cheap and not so cheerful post-war prefab bungalows. There are plenty of British and even Guernsey builders who have tried to incorporate elements of modular building into development projects, which is exactly why they insist ‘we tried it and it didn’t work’.

According to Forbes, the long-standing American business magazine, success with modular building comes from contractors forgetting what they think they know about modular building and its many misconceptions. Starting with a clean slate is essential with all the project’s key players together from the point of conception and willing to engage in a different work culture.

The Swedes recognise the enormous benefits in, I quote, transferring the rudimentary manufacture of a house from highly variable on-site environments using a transient workforce of variable competence to a place where standardisation, process and protection from the elements allow for precision and rigorous quality control.

Off-site construction methods reduce costs, improve working conditions and completion schedules and decrease the amount of waste produced in the building process.

As Forbes put it, ‘modular construction takes everything that a builder knows about building and changes it’. That might be too radical a change for some but the change is worth it.