Housebuilders’ costs
rose 3.9% in the year to 2Q2018 and are expected to rise a further 1% in
3Q2018, according to the BCIS Private Housing Construction Price Index (PHCPI).
Construction output
from the housing sector has been rising fairly steadily since 2013 and at
constant prices has almost doubled since the beginning of 2013.
Housebuilders’ costs
started to pick up at around the same time and in 2Q2018 were 28% higher than
in 1Q2013.
In the latest
quarter, 70% of contributors reported increases in costs. Of those that
indicated a cause, 25% cited labour costs had risen, 8% reported materials cost
increases and 67% reported increases in both labour and materials.
The responding
contractors expect their costs to continue to rise in 1Q2018 by a further 1%.
Cost increases
reported by individual housebuilders in 2Q2018 included:
- bricklayers
- joiners
- bricks
- insulation
One contractor
commented that he was having to source bricks from abroad while another stated
that increases resulted from ‘general inflation due to skills shortage, market
remains cautious approaching unknown nature of Brexit impact’.
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.
