But surging sales prices will more than cover the increase as the housing market continues to recover.
A Bovis Homes update to the City today said: “With ongoing capacity constraints in the material and labour supply markets, build costs for 2014 legal completions are expected to increase by circa 5%.
“Positively, sales price increases are expected to at least cover this level of cost increase.”
The firm reported a positive year to date with a 78% jump in sales on 2013 and a steep rise in building activity with 80% more homes built in the first four months of 2014 compared to the same period in 2013.
David Ritchie, Chief Executive, commented: “With revenues increasing significantly and profit margins rising, the Group is confident of delivering a further strong improvement in return on capital employed in 2014, assuming stable market conditions.
“The Group continues to enjoy major success in land investment which will enable the business to drive strong shareholder returns in future years.”