Publication - Research and analysis

Scottish Housing Market Review: January - March 2021

Published: 30 Jun 2021

Summary of the latest Scottish housing market data.

Scottish Housing Market Review: January - March 2021
House Building: Lending

House Building: Lending

Lending to House Builders

The value of loans outstanding to UK firms involved in the construction of domestic dwellings rose by £1.9bn from February to March 2020, an increase of nearly one-third (31%), as shown in Chart 7.1. The sudden increase likely reflected the need for credit to fund short-term liabilities owing to Covid-19 restrictions on construction activities and home moves, which had adversely affected firms' income. In addition, firms may have drawn down funds as a precaution, given the economic uncertainty.

However, since October 2020 the value of loans has steadily decreased. As at April 2021, the value of loans stood at £5.3bn, £889m (or 34.9%) lower than the value of loans at February 2020 (£6.2bn).

Construction Material Prices

Data from BEIS on the cost of construction materials used in new house building (Chart 7.2) shows that construction material price inflation has accelerated since the early stages of the Covid-19 pandemic, when it was in negative territory, to stand at 9.6% in April 2021.

The annual increase in prices has been driven by certain products, namely concrete reinforcing bars (+37.3%), fabricated structural steel (+31.8%) and imported plywood (+22.3%), with the only notable fall in prices seen for screws and other similar products (-14.1%).

Chart 7.1 Loans Outstanding to Firms Involved in Construction of Domestic Buildings: UK (£ Millions)
Chart 7.1 outlines how the value of loans outstanding to UK firms involved in the construction of domestic buildings has changed since January 2015 to April 2021 on a monthly basis.

Source: Bank of England

Chart 7.2 Annual Change in Price of Construction Materials for New Build Housing: UK (Monthly)
Chart 7.2 provides information on how the annual change in the price of construction materials for new build housing in the UK has changed on a monthly basis. The data covers the period from January 2010 to April 2021.

Source: BEIS