Building price new houses stable

28/12/2005 14:00

The building price of new houses has been stable since the end of 2003. Between 2000 and 2003 the building price of new houses still rose by no less than 23 percent. In the period running from 2004 to mid-2005, there was no increase and the building price even dropped during a short period of time.

Costs of wages and building materials and building price

Costs of wages and building materials and building price

Sharp increase in wage costs and costs of building materials

The building price is defined as the amount paid by the prospective owner to the building contractor for a newly-built house. The amount covers the costs of building (wages, building materials and costs related to the building site, for instance, the cost of hiring a site hut for the building workers), overhead costs and a surcharge for risk calculations and profit margin.
Contractor’s costs largely consist of wages and costs of building materials. Both have risen in the period 2000–mid-2005, but not at the same rate; wage costs rose faster (17 percent) than costs of building materials (11 percent). The costs of materials make up 62 percent of total building costs.

Price increase building costs new houses, 2000–mid-2005

Price increase building costs new houses, 2000–mid-2005

Price of concrete considerably higher

Prices of building materials rose by an average 11 percent in the period 2000-2005. The most substantial price increase by more than 18 percent was recorded for concrete. Concrete covers 11 percent of total costs for building materials. Windows, doors and window frames, wood and products required for installation of the central heating system together account for 40 percent of total costs of building materials. The price increase for these materials was above average. The price increase rate for prefab materials, accounting for nearly 20 percent of total costs of building materials, was slightly below average. Glass, on the other hand, became cheaper between 2000 and 2005, but only makes up 4 percent of total building costs.

Price developments of building materials, 2000–mid-2005

Price developments of building materials, 2000–mid-2005

Keen competition largest bottleneck

The building price of new houses tallies with builders’ opinions and expectations as expressed in the annual economic survey conducted by the Economic Institute for the Building Industry. Builders anticipated fierce competition in 2004 and believed this to become the main obstacle for further progression in the sector.

Sanne Elfering and Cecile Schut