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News & opinion

29 JUL 2019

Housebuilders’ costs rising as output continues to increase

The BCIS Private Housing Construction Price Index (PHCPI) calculated using housebuilders' costs for 1Q2019 show an increase of 0.9% on the previous quarter and 4.3% increase when compared to the same quarter last year.

Construction output from the housing sector has been rising steadily since 2013 and at constant prices is up 5.2% in the year to 1Q2019.

Private housebuilders' costs in the latest quarter continue to rise as reported by 81% of contributors. Of those that indicated a cause, 50% stated that both labour and material costs had increased, whereas 29% of contributors reported labour and 21% material cost rises.

The most common material increases identified were plasterboard and insulation. Other materials mentioned by at least one respondent were:

  • timber kits
  • roof tiles
  • bricks and
  • blocks.

On average, respondents expect costs to rise by a further 1.4% in 2Q2019.

Housing starts, housebuilders' costs and inflation

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.

If you are a housebuilder and would like to participate in the BCIS PHCPI quarterly survey, please contact the team.

Email the BCIS team