When the last oil tankers cleared the Strait of Hormuz in late February few in the housebuilding industry could have conceived of what would follow. Those vessels, carrying around 160,000 barrels of oil each day bound for British refineries arrived at UK ports on 10th April. Since then, supply from the Middle East has stopped. The closure of the world’s most critical maritime chokepoint has created what the International Energy Agency and the World Bank call the largest supply disruption in the history of the global oil market.
For an industry that is reliant on the constant movement of heavy goods, fuel and chemically derived materials, the consequences are already being felt by housebuilders.
The Construction Leadership Council’s (CLC) Material Supply Chain Group – co-chaired by Builders Merchants Federation Chief Executive, John Newcomb, who addressed the Forum in April - reports that building material costs have risen around 5.1% in aggregate so far this year. Standard January price increases accounted for 2.2% of that figure with a further 2.9% attributed to the conflict. The most immediate and pronounced impact is on fuel and energy costs, which affect every supplier through transport and operational expenses. Domestic haulage fuel surcharges of 5% to 10% are already being applied across the sector. Diesel pump prices have risen 28% since the start of the conflict, with petrol increasing 15%.
Within building materials, the steepest rises are observed amongst chemically derived products such as adhesives, bitumen, PIR insulation and PVC pipework. PIR insulation is currently on allocation with lead times of around three weeks, driven partly by precautionary stockpiling. Concrete plain roof tiles are expected to remain in short supply until the end of the year. Attacks on Gulf smelters, which supply approximately 20% of Europe’s aluminium, are expected to have a significant further impact on both availability and cost. Some raw materials, such as steel, brass, tungsten and copper face inflationary measures coming down the road, with tariffs set to be implemented from 1st July. The CLC’s assessment is that all product categories show signs of either current or forthcoming price pressure.
The IMF has also downgraded its annual GDP growth forecast for the UK from 1.3% to just 0.7% since December. Inflation has ticked up to 3.3% and is projected to hit 4% before starting to ease. The Bank of England, which earlier this year was predicted to make several interest rate cuts, is now expected to keep the base rate at 3.75%, or potentially even raise it.
For SME housebuilders this is just the latest headwind facing the sector but one that could hardly have come at a worse time. ONS data shows that just 37,350 new dwellings were completed in the UK in Q3 2025, marking the lowest quarterly figure since 2014.
On the demand side, the picture is equally challenging. Mortgage rates, which had been expected to fall through 2026, are now likely to remain elevated or rise further. Consumer confidence has begun to deteriorate. Higher costs are producing greater caution: buyers are delaying decisions, and the risk of sales falling through is increasing.
To help housebuilders mitigate the impact of material cost rises, the CLC urges businesses across the supply chain to share forecasts and requirements early and communicate clearly. The geopolitical situation remains highly fluid: partial ceasefires, dual blockades and peace talks have followed one another in rapid succession, making confident planning difficult. Even in the most optimistic scenario, analysts estimate it would take four to six months after the Strait of Hormuz reopened for supply chains to normalise. For UK housebuilders, the key is to hold the line, plan carefully, and be ready to move quickly when conditions eventually improve.
In challenging environments like this, trust becomes even more central to supplier relationship. That's why the Regional & Bespoke Housebuilders Forum in partnership with our founding sponsors — VELUX, Hansgrohe, Imperial Bricks, Knauf, and Knauf Insulation — is undertaking research into supply chains and what makes a truly effective housebuilder-supplier partnership.
