Housebuilders’ costs respond to increased workload

Housebuilders’ costs rose 4% in the year to 4Q2017 according to the BCIS Private Housing Construction Price Index (PHCPI).

Houses in Bulwark Garden City

Housing starts began to rise in 2013 and have risen steadily since then. Starts in Q3 2017 (latest available figures) were up 44% on the same quarter in 2012. Housebuilders’ costs started to pick up at around the same time and in Q4 2017 were 27% higher than in 2012.

In the latest quarter, 75% of contributors reported increases in costs of which 30% indicated that labour costs had risen, 30% reported materials cost increases and 40% cited increases in both labour and materials.

The responding contractors expect their costs to continue to rise in Q1 2018 by a further 1%.

Cost increases

Cost increases reported by individual housebuilders in Q4 2017 included:

  • bricklayers
  • timber and related insulation for timber framed houses
  • groundworks and
  • scaffolders.

There were several mentions of a general skills shortage but one contractor commented that labour costs are stagnant.

 

Sources: Ministry of Housing, Communities and Local Government (MHCLG), BCIS, Office for National Statistics (ONS)

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 the housebuilders.

The BCIS PHCPI is published in the BCIS Online service.

If you are a housebuilder and would like to participate in the BCIS Private Housing Construction Price Index quarterly survey, please contact the BCIS data team

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