Home » Construction costs for Scottish social housing show strong growth

Construction costs for Scottish social housing show strong growth

Published: 18/04/2023

There has been a strong growth in the housebuilding prices over the past two years. Two indices prepared by BCIS are up by over a quarter since the beginning of 2021. The Scottish Social Housing Tender Price Index1 (SSHTPI) was up 27.3% between 4Q2020 and 4Q2022, while the BCIS Private Housing Construction Price Index2 (PHCPI) was up 27.0% over the same period.

Housing Construction Prices (Scottish social housing and UK private housing)

Source: BCIS

Tender prices for social housing in Scotland increased 2.1% in 4Q2022 compared to the previous quarter and 16.9% compared with 4Q2021.

Tender prices are driven by demand and by resource costs. The SSHTPI has tended to reflect the trend in demand from the housing sector. Total GB housing output is up 7.5% in the year to 4Q20222, although Scottish housing output has fallen slightly (O.5%) over the same period.

Underlying construction costs of labour, materials, and plant, as measured by the BCIS General Building Cost Index (GBCI), remained unchanged quarter-on-quarter in 4Q2022, but rose by 9.4% compared to the same quarter a year earlier.

Over the year to 4Q2022 underlying inflation, as measured by the Consumer Prices Index (CPI), rose by 10.8%.

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1 The Scottish Social Housing Tender Price index (SSHTPI) is prepared for the Scottish Government, More Homes Division. It is based on comparing the prices for the construction of houses in current schemes with cost models of dwellings of different type (terraced, semi-detached and detached houses and flats in different block configurations); occupancy (numbers of bedrooms and occupants), and size (floor area). These are adjusted for specification and design differences to provide a project tender price index. The project indices are adjusted for location and size of project. The quarterly index is calculated by averaging the adjusted project indices in each quarter. The index is smoothed to take account of the variation in the sample sizes. It is published on the Scottish Government website.
Housing Tender Return (HTR) and Scottish Social Housing Tender Price Index (SSHTPI)

2 The Private Housing Construction Price Index (PHCPI) is based on a quarterly survey of a range of small, medium and national housebuilders to identify the change in prices paid for constructing a standard house type. The price reported is the amount paid for the construction of the houses in their accounting system and may include an allowance for their own overheads, but will exclude land costs and other development costs and development profit. Changes in specification are excluded from the calculation of the index. The index is calculated as the mean of the percentage changes for the individual respondents. It is published on BCIS CapX.

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