Private housebuilders' costs increased by 4.6% in the year to Q3 2017 in response to demand pressures on resources. They have been rising steadily since the beginning of 2014.

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The BCIS Private Housing Construction Price Index shows housebuilders’ costs rising 1% in the latest quarter (Q3 2017).

62% of contributors reported increases in costs in the last quarter, 31% indicated that labour costs had risen and 35% reported materials cost increases.

The responding contractors expect their costs to continue to rise in Q4 2017 by a further 1%. A contractor commented that: ‘Input costs will continue to increase due to a rise in material costs, largely resulting from the devaluation of sterling, and also rising labour costs due to acute skills shortage.’

Cost increases

Cost increases reported by individual housebuilders in 3rd quarter 2017 included:

  • timber joints, roof trusses and MDF
  • bricks and blocks
  • imported materials
  • rigid insulation
  • roof tilers
  • scaffolders
  • bricklayers
  • dry liners
  • plumbers
  • electricians; and
  • plant.

Among the specification changes reported, one contractor noted an increase in the cost of wall insulation brought about by a change in specification due to the Grenfell Tower fire.

Note: the index is adjusted for changes in specification and reflects only underlying direct costs to housebuilders.

The PHCPI is based on housebuilders' costs in constructing a standard house; the latest quarter is based on contractors’ expectations; the TPI is based on rates in accepted tenders; and the GBCI is based on factory gate prices for materials and nationally agreed wage awards.

The BCIS Private Housing Construction Price Index, the BCIS General Building Cost Index and the BCIS Tender Price Index are 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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