Paul Rivett, Managing Director Heatrae Sadia is BMBI’s Expert for Water Heating.

Demand for water heating products held up well in Q4, as it did throughout 2016, regardless of the uncertainty created in the run up to the EU referendum and in its immediate aftermath. New private house building grew in volume, and light commercial electric water heating also did well.

However, the devaluation of sterling after the Brexit vote is starting to affect the market, with reported price increases of up to 8%.

At times like these, it’s important to understand the customer and continue to differentiate to add value with real innovation and strong end user benefits. In particular, products that save time and energy, and those that reduce whole life costs make a tangible difference to end users’ experience.

Boiling water dispensers for the home and commercial premises is one product area where we expect strong growth this year. Seventy million cups of coffee and 165 million cups of tea are consumed daily in the UK, and at work or in the home, people appreciate boiling water dispensers’ convenience, flexibility and ease of use. They’ve been shown to enhance employee welfare and satisfaction in the workplace. Under counter versions also provide chilled or ambient water options.

The economy is in far better shape than we expected with the Bank of England, ONS and other bodies recovering confidence and revising up their forecasts for 2017. Consumers have been on a spending spree, large housebuilders are selling what they build, and the Government’s Housing white paper outlines its plans to reform the housing market to increase the supply of new homes in England. It may not be bold enough to do all that, and it may take some time before the result of the Government’s consultations feed through to actual reform, but it should contribute to a stronger more sustained market.

A combination of higher prices, from exchange-rate movements, coming after a long period of low inflation, and investment uncertainty which is likely to delay the start of some construction projects, will result in a challenging year. We expect a flat market during the first half, and a softening in the second period as the two pressures start to bite. But, merchants and contractors who focus on new market opportunities from innovation and product developments will be best placed to mitigate softer markets and grow.