Private housebuilders continue to face rising costs

BCIS Private Housing Construction Price Index (PHCPI) rose by 3.4% in 2Q2021 and by 7.6% between 2Q 2020 and 2Q 2021.

Housing construction output fell by 1.5% in 2Q2021 compared with the 1Q2021 and shows and an increase of 94.7% on annual basis.

All of respondents to the survey reported rising costs, with a third attributing this to an increase in subcontractor’s costs and further 33% pointing at an increase in cost of both labour and materials as presented below:

Main reason for change in costs, 2Q2021

Increased cost of materials and supply issues remains the major concerns mentioned by respondents with steel and timber products being most frequently mentioned. One of the respondents shared that “The increased volume demand has outstripped supply of materials. This coupled with the missing labour due to Covid reasons has reduced productivity and increased costs.”

The second quarter has registered lower productivity compared to the last quarter, mainly due to the “pingdemic” and a resultant staff self-isolation. One of housebuilders reported that “Covid and Track and Trace are also having a large impact”.

Current productivity as a % of pre-COVID-19

When asked about productivity once revised working practices are established, respondents expect productivity to range between 85% and 100%, at an average of 96% (as a % of pre-COVID-19).

Costs are expected to rise by a further 2.5% in 3Q2021 compared to 2Q2021.

We would like to thank respondents to this survey for their contribution.

Housebuilding costs and private housing construction output

(BCIS Private housing construction price index 1998=100, ONS Private new housing output £million 2018 prices, seasonally adjusted)

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.

The BCIS PHCPI is published in the BCIS CapX service.