Annual housebuilding cost inflation, as measured by the BCIS Private Housing Construction Price Index (PHCPI), stood at 0.7% in 2Q 2024, down from a peak of 15.3% in 2Q 2022.
On a quarterly basis, this also represented a 0.7% increase compared with 1Q 2024.
Chief data officer at the Building Cost Information Service (BCIS), Karl Horton, said: “Of the respondents reporting a change in costs, 38% pointed to an increase in materials costs.
“One-quarter reported increased subcontractor costs and 13% said they had experienced increased labour costs.
“Conversely, 13% reported a decrease in materials costs and a further 13% said they had experienced lower labour costs.”
Looking to 3Q 2024, the housebuilders surveyed said they expected to see an average increase in costs of 0.7% on the quarter.
ONS construction output figures demonstrate continued pressure on the private housing sector.
In 2Q 2024, private new housing output saw a quarterly decrease of 0.8% and the sector was down by 8.4% on the same quarter a year earlier.
Horton said: “One of the respondents noted that, for the first time in a decade, they have no housing to build due to a protracted planning process, while another also cited obtaining approvals as the biggest problem they have.
“Reforms to the planning system have been promised by the government, but much of the detail around its ambition to oversee 1.5 million new homes being built over the course of this Parliament remains to be clarified.
“We expect wider economic factors will continue to impact affordability, and therefore questions of viability for housebuilders, into next year.”
