11 Jan 2017
Demand pressures and an upturn in the cost of resources are reportedly to blame for a rise of over 3% per annum in private housebuilders' costs.
The BCIS Private Housing Construction Price Index (PHCPI) rose 3.7% in the year to 3rd quarter 2016 compared with a 1.6% rise in general construction costs, as measured by the BCIS General Building Cost Index (GBCI), and a 5.8% rise in tender prices, as measured by the BCIS All-in Tender Price Index.
Underlying resource costs, which moved very little in 2014 and 2015, have risen steadily through 2016, while tender prices have risen significantly throughout the period. Housebuilders’ costs seem to reflect the general rise in tender prices. Over the period 1st quarter 2014 to 3rd quarter 2016 the indices show the following increase:
- General Building Cost Index – 3%
- Tender Price Index – 15%
- Private Housing Construction Price Index – 12%
Private Housing Index
The Private Housing Index rose 1% in the latest quarter (3rd quarter 2016), with a third of contractors reporting general rises in materials prices and 20% reporting increases in sub-contractors’ prices.
One respondent reported pressure on labour rates due to the high demand for housing and a busy sector, but noted that "valuation rates are however remaining the same, increasing costs but reducing margin".
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; 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 get in touch.
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