House building cost inflation eases as build out rates fall

Aaron Morby 2 months ago

Annual house building cost inflation slowed slightly at the end of last year to 12.8%, as the latest quarter-on-quarter rise fell to 1.7%.

The annual rate of increase, as measured by the BCIS Private Housing Construction Cost Index, now looks to have peaked at 15.3% in the second quarter of 2022.

All respondents to the latest survey cited increased costs, with 44% reporting increased subcontractors’ costs, 28% reporting increases in costs of both materials and labour, and 24% citing increases in materials costs only.

While a limited number of those surveyed reported the first signs of a decrease in materials costs during the last quarter of 2022.

The cost-of-living crisis, rising interest rates, end of the Help to Buy scheme and economic uncertainty are impacting the housing market, with output forecast to contract by 15.5% this year.

BCIS asked house builders about their response to the uncertainty in the market. Nearly half reported they’re postponing or reducing build out rates.

Nearly a third reduced selling prices with the remainder equally split between freezing recruitment, offering additional incentives or not taking any further action.

When asked about their expectations for the next quarter, the survey respondents said they expected house building costs to grow by an average of 1.4%.

BCIS continues to monitor the readiness of the industry to meet the requirements of the new Building Regulations.

The estimated cost uplift for meeting Part L Building Regulations as reported by house builders in the fourth quarter of 2022 stands at 3.6%.

Nearly 45% of respondents reported air source heat pumps as a chosen solution to meet requirements of the Part L Building Regulations, whereas 30% selected gas boilers and PV. The remaining respondents reported selecting a combination of these.

A limited number of respondents specified their selected choice as gas boilers and PV combined with the extra wall and floor insulation and mechanical ventilation with heat recovery.

The Private Housing Construction Cost Index is based on house builders’ 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.


Latest news

Ilke Homes put up for sale in battle to save modular builder

Works stops at factory and sites as loss-making offsite specialist fights for survival
23 hours ago

Henry Construction crashes into administration

Hundreds of trade contractors hit by collapse of £400m revenue firm
2 days ago

Barratt to demolish 36 new homes with faulty foundations

Problems found on Cambridge estate
1 day ago

Firms readied for £750m Parliament repairs deal

Strategic Estate is renewing the estate repair framework
1 day ago

Magna Park developer to build 1.4m sq ft of spec sheds

Four major warehouse units to be spec built as total space hits 13m sq ft
1 day ago

Second staircases to delay resi tower projects by 9 months

Cost consultants cuts London tender price rise forecast to 2% this year
1 day ago

Plan approved for tallest resi tower in Wales

£55m project will be built next to Cardiff's Central Square
2 days ago

Bowmer + Kirkland bags £46m events centre in Derby

Developer keeps to original fixed price contract figure despite inflationary pressures
1 day ago

Costain dropped from £1.3bn A66 road job

National Highways pulls Costain off TransPennine upgrade and demands its £1bn A12 widening now shared as a JV
2 days ago

Laing O’Rourke plans to cut 200 staff jobs

Dartford head office to see bulk of job cuts
3 days ago

SES Services restructures senior team

New MD Rob Clifford to head four new divisions at M&E specialist
2 days ago

Galliford Try ranks top in May contracts league

Kier holds pole position for highest value of work won over last 12 months
2 days ago

£800m NEPO construction framework winners

BAM, B&K, Caddick, Esh and Morgan Sindall secure places for first time
2 days ago

Manchester Uni reboots 3,300-bed campus plan

Initial £7m demolition package out to tender ahead of planning submission
2 days ago

Subcontractors wanted across Derbyshire

Register now to meet big name buyers at latest Constructionline event
2 days ago

House builder Lane End owes £12m to suppliers

Administrators probing claims by creditors about company transactions prior to failure
4 days ago

£500m Suffolk construction framework winners

Fourteen contractors and seven M&E specialists secure spots on East of England framework
3 days ago

Illegal cartel whistleblower reward raised to £250,000

Competition watchdog hikes rewards to flush out more construction bid rigging activity
3 days ago

McLaren wins £28m East London health centre job

New three-storey health centre to be built in Hornchurch
3 days ago

Balfour sells telecoms division to Obelisk

Irish infrastructure firm continues expansion plans with Balfour acquisition
4 days ago

Blackburn M65 £20m junction 5 revamp to go-ahead

Balfour Beatty to be confirmed this week to start mobilising in November for 2025 start
4 days ago

Unfit planning system means 4,700-year wait for onshore wind

Call for urgent planning reform for even a chance to meet net zero and housing ambitions
3 days ago

Commercial work boosts construction new orders

Buyers report inflation easing to its weakest for 32 months
4 days ago

Mace, T&T and Atkins secure place on MoD framework

JV wins provide technical services on £5bn defence optimisation programme
4 days ago

Enabling works start on £200m Cambridge station

Murphy starts site preparation ahead of main contractor award next month
5 days ago

Industry aims to be almost diesel-free by 2035

Big players agree first steps to eliminate diesel from most sites
4 days ago

Weston Homes plans £50m East London scheme

Land deal for 147 homes at Town Quay Wharf in Barking
4 days ago

Lee Marley Brickwork hires Countryside regional FD

Matt Sheehan joins from house builder's partnerships arm
4 days ago

Demolition deal awarded on Chancery Lane refurb

General Demolition Ltd lands demolition and enabling works package
4 days ago

Contractors no longer lagging on digital transformation

Construction shrugs-off image as late adopter of technology
4 days ago

Contractor services