People rely upon the trading figures of these businesses in order to predict house prices so for the last 2 years it has presented a gloomy picture.
The latest figures from the major suppliers show trading up 10.4% in July. This is somewhat of a surprise given that house builders are not currently spending. However these companies have put the increase down to consumer spending. Many people now are not moving home but deciding instead to improve their own home. With the invention of the world wide web you can order all your building materials online.
A spanner in the works could be the introduction of the UK VAT increase which means another 2% on all goods. To a business this is not too bad as they can offset the cost if they are VAT registered. However to a consumer and DIY enthusiast this is a cost increase they will have to bear. As a result this could mean that we see a decrease in consumer spending from Jan 2011.
House builders are still currently buying land at reduced rates in the hope that values and demand will increase over time. Once this happens and new homes are built again the economy could start moving. However with interest rates set to rise in the near future this might delay any kick start in the housing market.
So whilst the building materials trade see improvement this could not be as good as indicator as it used to be. There are too many other external factors to take into account.
Building materials industry sees increase in demand!