Private housing construction: what will the future hold post COVID-19?

The BCIS Private Housing Construction Price Index calculated using housebuilders’ costs rose 2.7% in the year to 1Q2020 and show an increase of 0.9% on the previous quarter.

At the same time, construction output from the housing sector fell by 4.2% in the last quarter and by 5.5% in the year to 1Q2020.

When we asked PHCPI respondents about change in costs, 46% of contributors to this quarter’s survey reported an increase in costs. Of those, 33% cited that labour costs had risen, further 33% reported labour and materials cost increases, with the remaining responses split equally between those reporting an increase in costs of materials and those not specifying any details.

In this survey, we have asked respondents about an impact that COVID-19 has had on their operations from the beginning of lockdown to the end of May. Nearly a third of responses cited decrease in sales among the main impacts, followed by a decrease in production and ceasing of operations (23% each), material shortages (15%) and reduced labour force (8%).

The majority of our respondents noted that there has been a significant effect on productivity from staff shortages and the new Site Operating Procedures, with the range of current productivity (as a % of pre-COVID-19) being between 0% and 80%, 49% on average. When asked about productivity once revised working practices are established, respondents expect productivity to stand between 65% and 97% (as a % of pre-COVID-19).

Looking ahead, reduced/delayed sales, maintaining safe working environment and supply chain network were noted frequently among challenges until the end of the year (33%, 22% and 11% of responses respectively).

We would like to thank respondents to this survey for their contribution; if you would like to like to participate in the BCIS PHCPI quarterly survey, please contact [email protected].

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)