Build cost increase over time

[Raine]

 

Hi,

 

I'm trying to work out a budget for a new project based on my previous build costs, but my last build was 10 years ago, and I don't know how much costs have increased since then.

 

Does anyone have any real-world examples of any build cost increases over the past 10 years or so, no matter how large or small? 

• Perhaps you've done two similar bits of work in different years?
• Or you did a whole self-build a few years back, and then another one of a similar standard more recently? 
• Price per square foot or metre, and which years each were done, would be a great help.

 

Alternatively, what's your gut feel for annual increase?

 

UK inflation over the past 10 years averaged 2.7%, according to the Bank of England Inflation Calculator (clicky), but I think build costs have increased more than that, right??

 

 

Edited February 4, 2021 by Raine

[ProDave]

My previous build in 2003 I did for about £650 per square metre.  The present one is coming in just under £1000 per square metre. Both with me doing a lot of work, probably more if it on the present one, but on the other hand the present one is build to a higher finish, e.g. better doors and frames etc.

[daiking]

1 hour ago, Raine said:

 

Hi,

 

I'm trying to work out a budget for a new project based on my previous build costs, but my last build was 10 years ago, and I don't know how much costs have increased since then.

 

Does anyone have any real-world examples of any build cost increases over the past 10 years or so, no matter how large or small? 

• Perhaps you've done two similar bits of work in different years?
• Or you did a whole self-build a few years back, and then another one of a similar standard more recently? 
• Price per square foot or metre, and which years each were done, would be a great help.

 

Alternatively, what's your gut feel for annual increase?

 

UK inflation over the past 10 years averaged 2.7%, according to the Bank of England Inflation Calculator (clicky), but I think build costs have increased more than that, right??

 

 

I’m not sure why you are looking to the official inflation rates for inflation guidance. It is a massive failure that house price inflation is not reflected in the inflation numbers. It is my contention that build prices are more related to general house price inflation than any of the inadequate inflation indices that the ONS produce.

 

This goes for anything trade related. The price depends on your house price as much as it does material costs and normal rates.

[Raine]

8 minutes ago, ProDave said:

My previous build in 2003 I did for about £650 per square metre.  The present one is coming in just under £1000 per square metre. Both with me doing a lot of work, probably more if it on the present one, but on the other hand the present one is build to a higher finish, e.g. better doors and frames etc.

 

So, that's 17 years between builds, and total costs increase of 54%, which by my calculations, is 2.7% per annum.  According to the BoE, inflation over that time was 2.9% PA.

 

So you have managed to up-spec slightly and come in below inflation - gold star to you!!!  How do you think you did it?  ⭐

  

[Raine]

4 minutes ago, daiking said:

I’m not sure why you are looking to the official inflation rates for inflation guidance.

I'm not really, but I've got to start somewhere, right?  ?

 

I have figures from old vs. new Housebuilders Bible, but wanted to see what others real experiences were like too.

 

Good suggestion though - I'll track down some house price data for the local area and run some calcs to see what figures come out.

[daiking]

3 minutes ago, Raine said:

I'm not really, but I've got to start somewhere, right?  ?

 

I have figures from old vs. new Housebuilders Bible, but wanted to see what others real experiences were like too.

 

Good suggestion though - I'll track down some house price data for the local area and run some calcs to see what figures come out.

Prodave did it by doing the work himself. 

 

I’ll have a look for something about the relationship between trades rates and house prices, was a while ago though. 

[nod]

We came in at 820m2 Two years ago We expect to be under a £1000m2 this time 

The amount of labour you use is key 

Labour rates are very high and show no sign of decreasing 

[AliMcLeod]

Since labour rates are a large part of most builds (there are a few on here where some have done a significant amount of work themselves), it might be worth factoring in average wage increases in those 17 years, as well as looking at inflation figures.

[Raine]

I've done some more calcs:

 

UK average wages (here) increased by an average of 2.0% annually between 2010 and 2020 (21.6% overall increase over the period) .

 

HB Bible has a table in chapter 1 entitled "How Brickie's Rates Track Average House Prices", and there is indeed, as @daiking says, an extremely close correlation.  According to that, in the most recent 6 years (2013-19), brickies' rates have increased at an average of 3.8% annually (25% overall), and UK national average house prices have increased at 4.0% annually (26% overall) over the same period.

 

(if we look over 10 years instead of 6, for comparison with the national wages picture, the average annual brickie rate increase is 3.8% (46% overall) and average house price increase is 2.6% (30% overall) - so there's a close correlation over 6 years, but not so close over 10 years, but it seems that brickies wages grown at almost double the pace of overall UK wage growth). 

 

Somewhat confusingly though, just a few pages further on in the HB Bible we find the Model House costs table, which, upon comparison with HB Bible 10 (2013), labour rates for inner & outer skin have increased 5.2% annually (35% overall) over the 2013-19 period.  Seems to conflict?

 

  

Edited February 4, 2021 by Raine

[daiking]

11 hours ago, Raine said:

I've done some more calcs:

 

UK average wages (here) increased by an average of 2.0% annually between 2010 and 2020 (21.6% overall increase over the period) .

 

HB Bible has a table in chapter 1 entitled "How Brickie's Rates Track Average House Prices", and there is indeed, as @daiking says, an extremely close correlation.  According to that, in the most recent 6 years (2013-19), brickies' rates have increased at an average of 3.8% annually (25% overall), and UK national average house prices have increased at 4.0% annually (26% overall) over the same period.

 

(if we look over 10 years instead of 6, for comparison with the national wages picture, the average annual brickie rate increase is 3.8% (46% overall) and average house price increase is 2.6% (30% overall) - so there's a close correlation over 6 years, but not so close over 10 years, but it seems that brickies wages grown at almost double the pace of overall UK wage growth). 

 

Somewhat confusingly though, just a few pages further on in the HB Bible we find the Model House costs table, which, upon comparison with HB Bible 10 (2013), labour rates for inner & outer skin have increased 5.2% annually (35% overall) over the 2013-19 period.  Seems to conflict?

 

  

??? I had a look and couldn’t find it. I can’t believe that in was in the HB bible all along!

 

There you go though, general stats on wages and inflation are not applicable to this. Does the ONS inflation basket cover building materials? Because the change in price of phone apps and avocados probably isn’t relevant to the cost of house building. Ultimately I don’t think what you want to know is indexable. I’m sure you’ll be shocked when you get some quotes.

There seem to be 3 levels of price around.

 

1. Genuine self-build where people do a lot of their own work and the low costs incurred seduce other people that this is a good idea.

 

2. Mates rates where people know people and pay a reasonable price.

 

3. The real world price strata for people not in groups 1 & 2, where the costs start at an arm and a leg and rise to face ripping off extortionate. 

[Raine]

1 hour ago, daiking said:

There seem to be 3 levels of price around.

 

1. Genuine self-build where people do a lot of their own work and the low costs incurred seduce other people that this is a good idea.

 

2. Mates rates where people know people and pay a reasonable price.

 

3. The real world price strata for people not in groups 1 & 2, where the costs start at an arm and a leg and rise to face ripping off extortionate. 

 

All understood, and I am in bracket 3, unfortunately.

 

 

To explain my reasons for this post a bit more:

 

In my previous projects, I've budgeted based on the individual costs & tables throughout HB Bible, with careful and highly detailed adjustments based on London labour rates etc., and my final costs have always come in pretty close to budget. 

 

So I was thinking (just for early high-level budgetary purposes) to take my previous costs and add x% per year, compounded over the 10 years since my last project.  That's why I'm after people's real-world experiences of cost increases over time.

 

I thought 5% per year might be a reasonable budgetary increase, but I don't know if I'm dreaming and it's actually much higher than that?

 

Edited February 5, 2021 by Raine

[Ferdinand]

Land Registry HPI index is a good tool.

 

eg https://landregistry.data.gov.uk/app/ukhpi/browse?from=2010-10-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Funited-kingdom&to=2020-12-01&lang=en

 

if you take 10 years, the increases are not that much different to inflation, or for that matter to average wages.

 

HP inflation is much lower, perhaps even 2/3 lower, for 2010s over 2000s. But general squeeze has gone with it, ie 'austerity'.

 

It might be useful to get a secondhand version of SPONS and the current one to compare. Or say 2010 and 2018 to be cheapskate.

 

Also newbuild premium has perhaps shrunk, and some things are cheaper. Suspect posh 3g windows are disproportionally up, whilst very good 2g are relatively cheaper.

[SimonD]

1 hour ago, Raine said:

 

All understood, and I am in bracket 3, unfortunately.

 

 

To explain my reasons for this post a bit more:

 

In my previous projects, I've budgeted based on the individual costs & tables throughout HB Bible, with careful and highly detailed adjustments based on London labour rates etc., and my final costs have always come in pretty close to budget. 

 

So I was thinking (just for early high-level budgetary purposes) to take my previous costs and add x% per year, compounded over the 10 years since my last project.  That's why I'm after people's real-world experiences of cost increases over time.

 

I thought 5% per year might be a reasonable budgetary increase, but I don't know if I'm dreaming and it's actually much higher than that?

 

Here's both recent and long term construction cost inflation data:

 

https://edzarenski.com/2020/01/28/construction-inflation-2020/
https://edzarenski.com/2016/10/24/construction-inflation-index-tables-e08-19/

 

I've found it difficult to correlate this kind of data to real world self-build costs because for both labour and materials, you're dependent on your local market. For example, we're based near Bath which is a ridiculous micro-climate of high build and material costs, partly due to the influx of Londoners with large amounts of cash. Go somewhere down the road like Trowbridge, and it's a completely different story.

 

I've also seen some pretty scary short term price fluctuations. For example, one year, timber prices, particularly for OSB rocketed by 23% percent, but then settled down, so this year I bought a load  t & g 4 osb floor boards and they were 'just' £1.18 more than over a year ago (but still over 10%), but were at one point in the year much higher than this.

 

With windows, I've seen the greatest increase of well over 20% over 18-24 months. Difference between 2g and 3g is marginal at present.

 

In short, whilst general material and labour cost inflation can be evened out nationally and over a long period of time, I'd say it's not a very reliable indicator to use when pricing up your own build, but I think that's exactlywhat you're saying ?

Edited February 5, 2021 by SimonD

[Ferdinand]

Is there value in creating your own "house model", and running it through one of the online price check services?

 

They are only low hundreds or so aiui. 

[Bitpipe]

More anecdotal than evidential but a fair chunk of our build (frame, basement elements, bathroom fittings, internal doors, velux windows, stairs, furniture) was euro priced.

 

We built from summer 2015 to summer 2016 so benefited from the 1.4 exchange rate pretty much to the end before it dropped post referendum. Looking at the historical exchange it looks like we were lucky in that respect.

 

 

I've had a few trades back over the last years and their day rate has not changed appreciably. 

[Raine]

3 hours ago, SimonD said:

 

https://edzarenski.com/2020/01/28/construction-inflation-2020/
https://edzarenski.com/2016/10/24/construction-inflation-index-tables-e08-19/

 

 

@SimonD this is an American site so whilst interesting, probably can't be drawn on directly for the UK market.

 

Interesting what you say about local microclimates for pricing.  Another good reason to research, research, research before committing (but of course much easier said than done!).

 

I think I will get hold of an old copy of the Spon's guide and spend the weekend doing my usual line-by-line detailed budget calcs based on my past costs, latest HB Bible figures, bring in Spon's costs for good measure, and apply my best-guess estimate for each item.

 

Well, nothing else to do in lockdown with bad weather, is there?  ?  

 

 

@Ferdinand - did you mean something like this?

https://www.estimators-online.com/

 

 

@Bitpipe, good to hear that you've not seen a great deal of trade cost inflation.

 

 

[gavztheouch]

8 hours ago, SimonD said:

Here's both recent and long term construction cost inflation data:

 

https://edzarenski.com/2020/01/28/construction-inflation-2020/
https://edzarenski.com/2016/10/24/construction-inflation-index-tables-e08-19/

 

I've found it difficult to correlate this kind of data to real world self-build costs because for both labour and materials, you're dependent on your local market. For example, we're based near Bath which is a ridiculous micro-climate of high build and material costs, partly due to the influx of Londoners with large amounts of cash. Go somewhere down the road like Trowbridge, and it's a completely different story.

 

I've also seen some pretty scary short term price fluctuations. For example, one year, timber prices, particularly for OSB rocketed by 23% percent, but then settled down, so this year I bought a load  t & g 4 osb floor boards and they were 'just' £1.18 more than over a year ago (but still over 10%), but were at one point in the year much higher than this.

 

With windows, I've seen the greatest increase of well over 20% over 18-24 months. Difference between 2g and 3g is marginal at present.

 

In short, whilst general material and labour cost inflation can be evened out nationally and over a long period of time, I'd say it's not a very reliable indicator to use when pricing up your own build, but I think that's exactlywhat you're saying ?

I noticed you mention osb tg4 boards. I purchased about five pallet loads in 2016 for about £6. In 2017 I bought some more at £7. Last year I went back for another batch the price had rockets to £9 that was around October. Just had another quote for £11 this time just last week. All prices plus vat.

 

 The biggest rises are from Covid. It’s a crap time to be building or buying a house right now.

[Ferdinand]

Yes.

[PeterW]

7 hours ago, Raine said:

think I will get hold of an old copy of the Spon's guide and spend the weekend doing my usual line-by-line detailed budget calcs based on my past costs, latest HB Bible figures, bring in Spon's costs for good measure, and apply my best-guess estimate for each item.

 
there is a cost book on the forum I posted somewhere and I think I have a link to Spons 2017 somewhere ..!

[Ronan 1]

I've got 26 emails since returning to work after the Christmas break notifying me of price increases covering pretty much every item or constituent component used in construction. Average increase is 6% with the notable exception of insulation which has risen by an average of 12% and steel which has jumped from €535 a ton to €710 a ton and a warning of it going to €800 a ton by mid March ( good job we locked in 2000Ton at €540 before Christmas..)

 

P.s this is prices in and around Dublin area.

[SimonD]

18 hours ago, Raine said:

 

@SimonD this is an American site so whilst interesting, probably can't be drawn on directly for the UK market.

 

Apologies, I should have made a note to say that although providing some indicative data, treat with caution! Although it does provide some correlation to the global commodities of timber products,for example, due to their interconnectedness. There are always the ONS construction price indices, if you're really desparate for something to do ?Although again not sure if it'll be that much help either.

 

18 hours ago, Raine said:

Interesting what you say about local microclimates for pricing.  Another good reason to research, research, research before committing (but of course much easier said than done!).

 

I think I will get hold of an old copy of the Spon's guide and spend the weekend doing my usual line-by-line detailed budget calcs based on my past costs, latest HB Bible figures, bring in Spon's costs for good measure, and apply my best-guess estimate for each item.

 

Well, nothing else to do in lockdown with bad weather, is there?  ? 

Not unless you're in the middle of building! Good luck with it.

[SimonD]

13 hours ago, gavztheouch said:

I noticed you mention osb tg4 boards. I purchased about five pallet loads in 2016 for about £6. In 2017 I bought some more at £7. Last year I went back for another batch the price had rockets to £9 that was around October. Just had another quote for £11 this time just last week. All prices plus vat.

 

 The biggest rises are from Covid. It’s a crap time to be building or buying a house right now.

Your experience mirrors mine almost exactly, although I got mine for £10.18/board in December. So about 10% in less than 2 months!

 

It's challenging isn't it? Not only has our budget been massively affected by this, it's also the drag on making progress sometimes due to little stuff like delayed fixings holding up a job. My sequence is now a wreck as it has sometimes ended up as doing a little bit here and a little bit there, while I wait for this stuff to arrive, and while all that's going on lets try and homeschool the kids!

 

I think you're right it has loads to do with Covid, all timber manufacturers across Europe have been operating at full capacity yet still can't satisfy demand and then you have situations like late last year when apparently European CLS supplies were all diverted to the US because they paid more for it. I pretty much cleared out the last couple of pallets at my local merchants before Christmas and did the same with 3 pallets of plywood where they warned me they had no idea when they'd be able to get additional stock in.

[SimonD]

10 hours ago, Ronan 1 said:

I've got 26 emails since returning to work after the Christmas break notifying me of price increases covering pretty much every item or constituent component used in construction. Average increase is 6% with the notable exception of insulation which has risen by an average of 12% and steel which has jumped from €535 a ton to €710 a ton and a warning of it going to €800 a ton by mid March ( good job we locked in 2000Ton at €540 before Christmas..)

 

P.s this is prices in and around Dublin area.

 

So as you're not within the Brexit zone, this is all down to supply and demand, and that production and supply chains have been decimated as a result of Covid?

 

What are the bests prices won't come down too much following recovery? Unless of course there's a major follow on recession?

[Ronan 1]

35 minutes ago, SimonD said:

 

So as you're not within the Brexit zone, this is all down to supply and demand, and that production and supply chains have been decimated as a result of Covid?

 

What are the bests prices won't come down too much following recovery? Unless of course there's a major follow on recession?

Alot of our material while not necessarily from the UK are traditionally routed through the UK so Brexit is also a factor on top of Covid, however how much of a real problem both these actually are I'm unsure and have a feeling alot of people are jumping on the bandwagon and pushing prices as they now have reasonable excuses to.

 

Prices are expected to increase further in the summer according to most suppliers and no I wouldn't expect any prices to reduce unless we see a recession.

Edited February 6, 2021 by Ronan 1

[gavztheouch]

Would like to think it will come back down some way in price once the vaccine is deployed.  You could even argue factories should have priority after the top priority groups have been vaccinated. Would help keep supply consistent. Currently sitting on savings of 150k watching it get eroded by quite extreme price inflation.