BMF’s Winter Sales Forecast predicts gradual growth in 2024

The Builders Merchants Federation’s (BMF) Building Materials Forecast reports signs of hope for the building materials sector and forecasts improvements in late 2024.

In the short-term, the BMF states that affairs could improve and there could be an annual growth of 0.4% for 2024 – increasing to 1% in 2025.

BMF CEO, 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.

“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.”

The BMF’s final forecast for the 2023 showed negative growth of -3.5% over 2022 – down from -1.4% in our previous forecast, published mid-year.

There are few signs that this state of affairs will improve in the short term, with the BMF forecasting a further decline in Q1 2024, down by -2.2% on the first quarter of 2023.

Thomas Lowe, the BMF’s Industry Analyst and Economist, 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.”