Sensible or Stupid to build an extension in a recession?

[SatsumaZoom]

What are people's thoughts on this? We have the money in place, but not much of a buffer. Will it be cheaper potentially to build (materials etc) or will it likely just get more costly? I hate that I have limited understanding, and don't want to make the wrong decision. (We are currently at the point of finalising architectural drawings before submitting to planning)

The trades people will start to become more available once the backlog clears.

Generally building gets cheaper during a recession, as less people build demand for labour goes down, so does the price of labour. If you have the cash I would wait it out a bit

We’re part way through ours and building materials are continuing to go up in price. I can’t see they will come down. Also our builder is booked out for the next year so clearly people are still carrying on with extensions.

Construction always goes in cycles of boom and bust. The trades have been doing well recently as demand has outstripped supply. I think that we are due for a reversal.
I can't see material costs coming down but the price of trades and their unavailability should modify. Carry on with your plans but don't hurry the process (drawings, planning, etc) and let nature (the boom/bust cycle) take its course.

Materials will keep rising. Labour may get cheaper as people put off spending, but the backlog is still huge local to us and good tradesmen are booked up for the next 6 months or so minimum. You may get a cancellation as people get nervous but it may take a while to trickle through. We have booked for some under stairs storage in September and the earliest date is January! And this is a job that takes less than a day to fit!

I would just go for it now if you want it, you will benefit from the extra space.

Regardless of timing I would get a really a decent buffer first. There can be unexpected problems (not always though) and materials are still unstable. Unexpected extras can really mount up.

What size contingency do you have?

Like others have said materials will just continue to rise.
Trades might get cheaper & more accessible
So why not?

Also, I don't think that there is a 'one size fits all' answer. It will depend on whereabouts in the country you are, eg London is always a special case

I would still go ahead as planning will take time, as will getting tenders out and back and appointing a builder. That should give you extra time to build up your buffer.

I don't think labour will come down but if does that's a bonus. Who knows what's around the corner?

Realistically you'd be looking at starting the work towards the end of next year so you can always stop the process if things are looking absolutely dire in the meantime. Your planning permission lasts for three years so it won't be wasted money if you decide to hold off.

Thanks everyone. We are adding about 13 square meters and renovating another 20. By my calculations saying the 13 will cost about 2.5k per square meter minimum and the 20 about 1 (nothing structural being done) that comes out at approx 55k. Then we've a kitchen fit (looking at second hand) and a tiny bathroom within it. I've been quoted 3k for the bathroom and I'm looking at kitchens for around 7k, then we've a buffer of about 10k. All seems a bit close to the wind if prices keep going up, but you are all right we can keep saving until it starts and drag our feet a bit, and worse case pull out or simply build the shell which we can definitely afford and use camping equipment until we can afford the rest 🤣 what do you guys think? I really appreciate your helpful advice.

I think if you've got 75k set aside for that it should be doable tbh

Not a chance I’d be recommending a poster embark on a substantial extension with only a small buffer at a time like this

knowing bugger all about their financial situation

not a chance

We have gone ahead. We've been planning for years and postponed twice during covid. If we don't do it now we never will, and it's still cheaper than moving. Our reasoning is we want the extra space now when the DC are young, we'll get more value out of our spending if we do it now.

We won't get the money back in terms of the value of the house but we have no plans to move and won't be in negative equity thanks to the growth in prices since we bought (a different thread).

I wouldn't go ahead if it leaves you with little savings and your jobs are remotely precarious, or if your mortgage payments may no longer be affordable (with or without borrowing extra). Also, frankly, our parents are reasonably wealthy and while we would never ask for anything and we're funding the build ourselves, I would be disingenuous not to acknowledge that if our situation changed and things were dire they would never see us struggle.

Not a chance I’d be recommending a poster embark on a substantial extension with only a small buffer at a time like this
But she's not. At this stage she is merely planning and saving.
Worse case scenario is that it costs some professional fees and she ends up with her current house but now with the extra of planning permission for a costed extension.

I think the best plan is to decide which bits are important; to save like made; to keep an eagle eye out for bargains.

I was referring to posters saying “go for it”

I think planning it in stages is a good idea. When I realised during our whole house reno that our money wouldn't last for everything I'd planned, we focused on getting the structural work finished and, like you, op, suggested, had a break to save up more, and in the mean time I looked for cheaper kitchen fittings. Also, you wouldn't need the whole kitchen in 1 go. E.g. get a cooker, sink unit first, and ideally the base cupboards surrounding them. At a later stage you can then add top cupboards, island, dressers etc. It's a long process, so if you want it done before your kids grow up, I would definitely get planning permission, quotes, designs ready now and then go to tender, but maybe don't order final fittings yet to leave a buffer.

I would recommend a buffer if 30%. This can be mitigated if you have a really tight contract which is linked to a very detailed spec. What you will see is some builders drop out at that stage as they hate detailed specs as it curtails their opportunity to to start drawing breath and tell you how much each thing will cost once they have started....with the "well that isn't covered"

DH and I have a lot of experience of refurbs and extensions and usually about half the builders drop out when they get the tender documents. Ironically the ones that remain have always done an excellent job so that says a lot!

I would wait....a recession and cost of living crisis always has a lag. In 12-18 months they will be fighting for work, BUT the good ones will always have a pipeline because of recommendations

My bfs mate is a builder and he said there is little work at the moment. The construction trade is always the first hit.

But materials are very expensive. House prices are going to drop significantly. But if the extension is just for your family rather than to make money I would get some quotes.

Good advice about being detailed and specific; avoiding wriggle-room and misunderstandings. Also , if you are going slowly slowly, remember to ask contractors how long their quote holds for.

Tenders are brilliant to get a level playing field for costings. Nothing left out as everyone has the plans to price from. The pp was right about some builders don't touch them but your architect will have a pool of trusted builders they have worked alongside before and will invite them to tender.

Current sq. m prices are £3k + Vat in the south and I agree about 30% contingency. If you do go for it, get as much work done as possible from each trade as it often works out more expensive to get them back in to finish off if you have settled back in (and all the disruption/mess is done at once).

I don't think demand, and therefore prices, will drop that much. There is a huge backlog. With a lot of people with money in the bank waiting to start a build once prices level off.

Plus, any drop prices due to demand is likely to be wiped out by increase in material costs.

If it's a long term home and the extension will improve your living quality. Then go for it. If you're planning to move in under 5 years time then there is a high chance you want get back what you put in.

I’m not convinced there’s huge demand for trades. We’ve just managed to get an electrician, plumber and plasterer at very short notice. I think people are already beginning to cancel work.

You've been really fortunate! Most around here (South East) are booked into the New Year.