Housebuilders’ costs rose in 2019, with 2020 looking similar

Housebuilders’ costs rose throughout 2019 and look set to continue to rise in the first quarter of 2020, according to the latest price index.

The BCIS Private Housing Construction Price Index (PHCPI), calculated using housebuilders’ costs for 4th quarter 2019, shows an increase of 0.9% on the previous quarter and a 2.8% increase when compared to the same quarter last year.

Construction output from the housing sector has been rising steadily since 2010 (up 140%) but fell slightly in 4th quarter 2019. At constant prices it is down 1.1% on the previous quarter but is up 1.4% in the year to 4th quarter 2019.

Nearly 60% of the respondents to the BCIS survey of housebuilders reported rising prices. Of those that indicated a cause, 36% stated that both labour and material costs had increased, whereas 36% of contributors reported material and 28% labour cost rises.

Specific material increases identified were plasterboard and insulation.

On average, respondents expect costs to rise by a further 0.9% in 1st quarter 2020.

Sources: Office for National Statistics (ONS), BCIS

The PHCPI is based on housebuilders’ costs in constructing a standard house. The index is adjusted for changes in specification and reflects only the movement in the underlying direct costs to housebuilders.

The BCIS PHCPI is published in the BCIS Online service.

Kindly shared by Royal Institution of Chartered Surveyors (RICS)