2024 – a year in review

A few months into 2025, the full picture of how the construction sector fared in 2024 is emerging. 

If there was one word which captured the mood of the construction industry in 2024, it was probably ‘subdued’. Following on from the slump in building towards the end of 2023, housebuilding stayed in the doldrums for much of the year, and repair, maintenance and improvement (RMI) projects also struggled to get going.

For merchants, it was a year to forget, particularly for those who were forced to close branches. Total value sales for January to December were -4.1% lower than the same period in 2023, and like-for-like value sales (which took into account the extra three days trading in 2024) were down -5.2%. Volume sales also fell (-4.3%). Perhaps the only silver lining was that prices were largely inline (+0.2%) compared to 2023 – a relief after the post-Covid surge in price rises and rising labour costs.

But what was the story behind the numbers?

According to our BMBI experts, 2024 merchant sales trends were influenced by a number of national and international factors:

Change in Government

One of the most influential events of the past year was the general election. Prior to the July election, our BMBI experts noted there was caution in the market, particularly as there was a lack of direct support for housing in the Conservative’s last Spring budget announcement in April.

As expected, a new Labour government was voted in, but there was no expected post-election bounce in any sector – including construction. In fact, after a particularly downbeat announcement by the new PM that tough decisions lay ahead, BMBI contributors noted that a lot of projects went on the backburner until after the Autumn budget, as companies and consumers waited to see what was in store and how they would be financially impacted.

Big promises

Despite the new Government failing to bring the feel good factor, they did have several key promises and pledges which our BMBI experts are keenly awaiting to see materialise. The biggest one being the pledge to build 1.5 million homes over the next five years. Planning reforms are already in motion to kickstart the process, but our experts remain concerned about supply chain issues, skilled labour shortages, a shortage of planners, and how 300,000 homes a year can be built in the time available (they can’t).

A mixed bag for businesses and consumers

There was positive news in 2024 as inflation continued to fall, finally reaching the 2% target set by the Government and the Bank of England. This was followed by a cut in interest rates, which was welcome news for mortgage holders (and those wanting to get on the property ladder) and those looking to borrow money for home improvements. Unfortunately, BMBI Experts say these aren’t enough to kickstart the housing market. Unexpectedly large rises in National Insurance and the National Minimum Wage have led to job cuts, recruitment pauses and reduced job security. Overall consumer confidence has plunged and the BMBI Experts’ panel say work not words is needed to restore faith in the economy and encourage spending.

British weather

Despite eight months of the year being warmer than average, it was a particularly wet and windy year which impacted new build housing, infrastructure projects and RMI projects alike. There was 7% more rainfall than average, driven by high levels of rain in February and September, and Storm Lilian in August marked the first time that named storms reached ‘L’ since the system was introduced. A number of experts remarked that this had been a factor in slow product sales in their markets.

World events

The UK is susceptible to the shocks of world events, and in 2024, there were several geopolitical events which impacted what happened in the building industry. Firstly, the conflict in Israel and Gaza led to an increase in Houthi rebel attacks on ships crossing the Red Sea, so shipping was diverted around the Cape of Good Hope adding time, carbon miles and expense to the goods arriving in the UK. The Baltimore bridge strike also impacted shipping costs and delivery times for Britain’s builders’ merchants and their suppliers. With the very real possibility of trade wars on the horizon for 2025, BMBI experts are mindful of the disruptive impact tariffs will have sending waves crashing through the supply chain.

Looking ahead

Despite enduring a tough 12 months of trading, there seems to be a lot of optimism among the experts on our BMBI panel. The Future Homes Standard, due to come into force in 2025, for example is a golden opportunity for merchants to diversify and upsell customers to ensure more rigorous standards of sustainability in building are met.

While a lot of the global rhetoric creates opposition and divergence, merchants and their suppliers are focused on collaboration – how can we work together to meet sustainable targets, build 300,000 homes a year and deliver a first-class service to the construction industry?

The world has entered a more difficult, less certain era, when it is hard to see clearly, but BMBI Experts’ shared insights and deep understanding of the issues affecting their markets, make it a little easier to stay one step ahead of the challenges.