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.

Ongoing growth in housebuilding cost inflation

Annual housebuilding cost inflation, as measured by the BCIS Private Housing Construction Price Index (PHCPI), stood at 2.0% in 2Q2025, down from a peak of 15.3% in 2Q2022.

On a quarterly basis, this represented a 0.7% increase compared with 1Q2025.

At the same time, ONS construction output figures demonstrate reduced pressure on the private housing sector. In 2Q2025, private new housing output saw a quarterly increase of 1.4%, and the sector was up by 5.7% on the same quarter a year earlier.

^{Source: ONS, BCIS}

Dr David Crosthwaite, chief economist at BCIS, said: ‘After the government announced new planning powers for local councils to bolster the number of new homes being delivered by 2030, we asked housebuilders if they feel this strikes the right balance between accountability and supporting private sector delivery.

‘All signs so far are that the government still has major inroads to make on boosting activity levels if it is going to come close to achieving its housebuilding target in this Parliament. Ideally, that would mean working with both developers and local councils to achieve increased output and not being seen to put them in opposition.’

Of the respondents reporting a change in costs in 2Q2025, 38% reported an increase in materials’ costs and a further 33% cited subcontractor cost increases as the main drivers.

Labour cost increases were noted by 24% of respondents, while 5% reported lower subcontractor costs as the reason for construction cost change for the quarter.

Looking to 3Q2025, the housebuilders surveyed said they expected to see an average increase in costs of 0.3% on the quarter, which would produce annual growth of 2%.

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.

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