UK underfloor heating market forecast to grow by 7% in 2018

The underfloor heating (UFH) market has performed well over the last few years, driven by good levels of commercial and domestic construction and RMI, and now accounts for almost 7% of the total UK heating systems sector. More recent growth can also be attributed to rising energy prices and concerns over fuel bills, and the fact that UFH is now seen as a more affordable mainstream heating option. In 2017, the market grew by 6%, with similar growth forecast for 2018.

The domestic sector accounts for almost two-thirds of the overall UFH market value, and includes new build activity by housebuilders, the self-build market and RMI / DIY retrofit projects in residential homes. Non-domestic applications account for the remainder. Although large-scale health and education projects represent the most significant non-domestic end-user markets, opportunities are arising in the care home, industrial, warehousing, leisure and entertainment, commercial office and retail sectors.

Water-based underfloor heating makes up the largest share by value, compared to electric systems. The supply structure is dominated by direct supply, with some manufacturers and other specialists offering a ‘supply and fit’ service. Elsewhere, UFH systems increasingly form a core component of the product ranges of companies such as tile manufacturers and kitchen and bathroom specialists. DIY multiples and merchants also continue to play a major role. Much of the recent growth in the market has come from online retailers, the number of which continues to expand.

Factors that influence demand for underfloor heating include housebuilding activity, which is expected to continue at a steady pace, as demand for new and affordable housing is likely to remain a major political issue. The conversion of commercial office spaces into multi-residential flats and apartments, particularly in areas of high population density, should create additional opportunities for UFH, as they are likely to be smaller in size and high-spec.

Ease of installation continues to be an important consideration within construction, given the ongoing skills shortages and a need to reduce both build time and cost. This is expected to contribute towards further growth in modular build/off-site construction, which should benefit the UFH market. Retrofit activity in both the domestic and commercial sectors are also expected to see steady growth.

In addition, the commitment towards further development of the renewable energy sector and sustainable homes should continue, irrespective of whether the Government meets its 2020 targets, and this is likely to favour adoption of UFH.  Growth will also be driven by product development focused on flexibility and maximising individual control of systems, which is likely to increase the efficiency of UFH systems further, and the increasing uptake of intelligent technology.

 “Although the market value has increased by almost 25% since 2013, there remains significant scope for growth in this sector” said Keith Taylor, Director of AMA Research.

“The level of installations remains low compared with European countries such as Germany and the Nordic nations. Penetration is forecast to continue to grow with demand driven by concerns over volatile energy bills, ongoing running costs of systems and maximising comfort, and the fact that underfloor heating is becoming a more mainstream product.”

The ‘Underfloor Heating Market Report – UK 2018-2022’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

UK contract floorcoverings market worth in excess of £1bn

After achieving strong growth of 4% in 2015, growth rates in the contract floorcoverings market were slightly disappointing in 2016 and 2017. A number of factors had a negative impact on the market, including increasing inflation towards the end of the period and adverse currency movements as an indirect result of the Brexit vote, affecting imports. However, despite reduced growth rates, the value of the contract flooring market exceeded £1bn in 2017. The contract sector accounts for around half of the total floorcoverings market, and its share continues to increase.

There has been only modest change to the product mix in this sector recent years. Carpet has decreased in share marginally, mainly reflecting a growth in vinyl flooring, which is now the second largest product group. The growth of vinyl has been underpinned by the increased specification of safety flooring and the more recent trend for luxury vinyl tiles to be installed in the retail and office sectors. The medium-term outlook is for similarly modest changes to the product mix, with carpet expected to continue to lose share marginally to vinyl products and floor tiles in the period to 2022.

UK manufacturers remain under pressure from imports, particularly from the larger overseas floorcoverings groups, who increasingly cover several types of floorcoverings products. However, going forward UK manufacturers should gain some competitive advantage from the increased cost of imported products, although that factor will increase the cost of any raw materials they import themselves.

Keith Taylor, Director of AMA Research commented: “The contract floorcoverings market has changed significantly over the last decade. Following developments in the domestic sector, a wider range of flooring products are now included in specifications, demonstrated by a move away from carpet towards smooth flooring materials in recent years. One change has been the move to a more integrated use of different flooring materials within a single installation, possibly combining carpeting with a vinyl product, although the use of different types of vinyl has also increased, especially LVT.”

Going forward, the outlook for the overall floorcoverings market is generally optimistic, although forecasts have been lowered recently, mainly resulting from the uncertainty affecting the Brexit negotiations, and over the next five years, growth rates of 2-3% are forecast in the market. Positive factors impacting the market include opportunities for new build and RMI work in the health and education sectors.

The construction of HS2 should lead to greater demand for floorcoverings on concourses, restaurants and perhaps other establishments near the various stations. However, growth in the contract sector is expected to be adversely affected by the lack of growth in the overall construction sector in 2018 and slow growth in the following years, as a result of a decline in the private commercial construction sector.

The ‘Contract Floorcoverings Market Report – UK 2018-2022’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Modular Floorcoverings Market - 5 Key Facts

• Returning confidence in the private commercial sector and the continuing growth of LVT (luxury vinyl tile) has seen modular floorcoverings increase by 22% between 2012 and 2017.
• Carpet tile is the dominant sector; however, pressures from competing modular floorcoverings have muted value growth over the last 2-3 years.
• LVT continues to outperform the wider market but the sector is increasingly subject to increased competition levels and significant downward pressure on prices. 
• Imports play a significant role for the market with carpet tile, LVT/vinyl tiles and ceramic/porcelain tiles having significant import penetration levels.
• More modest annual growth rates of around 2-3% are currently forecast to 2021, reflecting the current uncertainties surrounding the Brexit process, increased competition and further pricing pressures.

These facts have been extracted from AMA Research's 'Modular Floorcoverings Market Report - UK 2017-2021 Analysis' available for purchase now. 

7% overall growth forecast in the UK floor and wall tiles market until 2021

Subject as it is to the influences of consumer and business spending levels, construction output and underlying economic trends, the wall and floor tiles market delivered a strong performance between 2014 and 2017 with overall growth of 8%. However, growth rates have slowed to around 2% in 2016-17 with this more modest growth scenario likely to be a feature of the market into the medium-term. Key factors that have underpinned the market over the last 2 years have included strong demand from both contract and residential end-use sectors as well design and innovation trends that have added value to products.

The market has benefitted from returning confidence in the housing market in terms of both new housebuilding and RMI. The “improve not move” trend continues to positively influence the market with householders often trading up to higher value products particularly for floor tiles. Improving completions volumes for new housebuilding have provided opportunities for growth but the continuing trend for upstands and painted walls in kitchens for new houses has, to some extent, limited the potential growth for wall tiles. Non-domestic applications have continued to provide strong demand, including offices, entertainment & leisure, transport buildings, education and industrial.

Ceramic and porcelain tiles dominate the product mix, with natural stone accounting for around a fifth value share and the others sector accounting for the remainder. Consumer demand for durable, hardwearing and easy to maintain flooring has benefited the porcelain tiles sector in particular in recent years. A degree of polarisation is still evident at the lower end of the market where white & single coloured ceramic tiles remain popular, while in the mid-upper sectors of the market there is high demand for more decorative ceramic products as well as natural stone and stone and wood effect porcelain tiles.

Textures and design elements have become increasingly important within the market with continuing production and printing innovations allowing manufacturers to easily replicate the appearance of natural materials.  In addition, new technologies have meant that production turn-around times have been improved which has resulted in manufacturers being able to supply limited runs of higher value products aimed at the upper end of the market. Patterns and shapes remain a key element of the market with “random lay” decorative tiles for both walls and floors increasingly offered by suppliers.

The market is dominated by imports with penetration rate estimated at around 70% in 2017 with European producers dominating import supply. UK-based manufacturers are under increasing pressure and this is likely to continue as the Brexit process advances. This may result in further corporate activity such as restructuring and the moving of manufacturing bases.

“International trade is a key element of the market given the low number of UK based volume manufacturers but high levels of demand” said Jane Tarver of AMA Research.  “Sterling exchange rates are therefore likely to continue to have an impact on pricing into the medium-term as imports become more expensive. However, the ‘openness’ of the UK market to tile imports is unlikely to be reversed into the longer-term given the limited UK manufacturing base”.

Prospects for the floor and wall tile market into the medium-term remain relatively optimistic with the market forecast to grow to around by 7% between 2017 and 2021. Levels of residential RMI are forecast to increase to 2021, despite the economic uncertainty, and the trend for ‘get someone in’ - rather than DIY - is expected to continue benefiting the market.

The outlook for the non-residential construction sector is for only marginal improvement to 2018, followed by annual growth rates of 2-3% to 2021. In part, this reflects the uncertainty regarding the UK’s position post-Brexit, the reduction in business confidence and investment that are likely to affect some key sub-sectors for tiles, such as office construction.

Going forward, the floor and walls tiles market is likely to continue seeing significant competition from other surfacing materials, such as waterproof panels, including thin porcelain panels, LVT and other types of wall and floor coverings as well as the use of prefabricated bathrooms/wet room pods used in the contract sector.

The ‘Floor andWall Tiles Market Report – UK 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Brexit uncertainty likely to limit growth in the UK wood floorcoverings market

The UK wood floorcoverings market has a high level of import penetration, and is therefore highly susceptible to fluctuations in exchange rates. As such, it was impacted by the downward movement of Sterling following the 2016 Referendum. Prior to this, the market had been showing good growth, increasing by 6% between 2013 and 2015. While signs at the start of 2016 were positive, the climate of uncertainty surrounding the Brexit issue and the competition from LVT meant that growth for 2016 slowed to 1%. Estimates for 2017 show value growth of around 1-2%.

Wood floorcoverings are now marginally the second largest floorcoverings sector in the UK, currently accounting for an estimated 16% of the market in value terms, a share which has fallen only slightly since it peaked at 17-18% in the 2004-07 period. The main competition has been the vinyl sector with increasing popularity of LVT in both domestic and contract providing significant competition for some wood floorcoverings products.

Market trends have generally been positive since 2011, with growth strengthening until 2016, buoyed by rising consumer confidence as the economy improved and by improvement in the housebuilding and wider construction sectors. However, as in other market sectors, there was considerable variation between the performances of individual suppliers, together with strong competition from other smooth flooring products. Design trends have seen the increased use of greater colour variations and mixed plank sizes to allow bespoke flooring installations, but also the use of texture and embossing to replicate features such as knots, “distressing” and antique floors.

Domestic DIY installations of wood flooring are still below pre-recession levels and seem unlikely to improve in the short to medium term, as major DIY multiples carry out significant restructuring programmes in the face of consumer reluctance to carry out their own home improvement tasks. At the same time, the contract sector is now suffering from the uncertainty in business confidence, particularly in the commercial office and retail sectors.

Laminate, the largest product category in this sector, continues to be a strong driver of growth in the overall wood floorcoverings market and it has become an increasingly popular choice in the commercial/contract sector. Value added products with useful additional features, such as non-slip and water-resistant or waterproof flooring, have also helped stimulate demand. Sales of laminate are likely to continue to grow by an additional 2% in 2017.

The solid and engineered woods sector has been slightly more volatile than laminate, and has seen slowing growth of 1% in 2016 with similar growth estimated for 2017, while the market for accessories, such as underlay, edging strips, glues, jointing strips, is not forecast to grow significantly in 2017.

The rationalisation of production facilities away from the UK to lower cost countries by larger global players has been a critical factor in the increasing role of imports to the UK market. The percentage share of imports from the EU has risen significantly, from 45% in 2011 to 56% in 2016, while imports from Asia have fallen from 51% to 41% in that period.

Jane Tarver of AMA Research commented:

“The wood floorcoverings sector is forecast to show annual gains of around 2-3% in the period to 2021. Forecasting is difficult at present, with the Sterling exchange rates likely to have more impact into the medium-term than has previously been the case. Increased import costs will have a greater impact on margins and many suppliers may be forced to pass on these increased costs. However, value growth is also likely to be stimulated by increase demand for FSC and PEFC certified timbers as environmental considerations become more prominent in the specification process.”.

The housebuilding sector of the construction industry is a key driver of demand for wood floorcoverings and current forecasts indicate more modest annual rates of growth for completions of 2-5% between 2017 and 2021. The medium-term outlook for the non-residential sector is for only modest improvement to 2018, followed by annual growth rates of 2-3% to 2021, based on indications of slowing growth rates for new orders throughout 2016, together with an element of uncertainty that is affecting business confidence and investment levels.

The ‘Wood and Laminate Floorcoverings Market Report – UK 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.