Latest movement in the Private Housing Construction Price Index

The BCIS Private Housing Construction Price Index is a measure of the prices paid by housebuilders for constructing houses/flats, i.e. changes in the costs of direct/subcontracted labour, plant and materials, overheads and profit attributed to the construction, but excluding the cost of land and other development costs and any development profit.

A range of small, medium and national housebuilders are surveyed each quarter to identify the change in prices paid for constructing a standard house type. Contributors are also asked to provide their expectations for price changes in the following quarter and the mean of these projections is published as a forecast for the current period.

Continued growth in housebuilding cost inflation

Annual housebuilding cost inflation, as measured by the BCIS Private Housing Construction Price Index (PHCPI), stood at 0.7% in 2Q2024, down from a peak of 15.3% in 2Q2022.

On a quarterly basis, this also represented a 0.7% increase compared with 1Q2024.

At the same time, ONS construction output figures demonstrate continued pressure on the private housing sector. In 2Q2024, 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.

Source: ONS, BCIS

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 3Q2024, the housebuilders surveyed said they expected to see an average increase in costs of 0.7% on the quarter.

Chief Data Officer at BCIS, Karl 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.’

We would like to thank the PHCPI survey respondents for their contribution.  

If you are a housebuilder and would like to participate in the BCIS PHCPI quarterly survey, please contact contactbcis@bcis.co.uk

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter.