Private Property Development Costs Have Risen by 5% Development Finance 10th July 2017 | By Colin Moloney Property development has seen a great rise in popularity over recent years, but the latest statistics from the Building Cost Information Service (BCIS) has revealed that it is actually becoming an increasingly expensive venture. Why Are House Construction Costs Rising? Figures from the BCIS Private Housing Construction Price Index have revealed that there has been a 5% increase in costs in the year to Q1 2017. The data also revealed that costs rose by 1.5% in Q1 alone. How are these costs broken down? Well, two thirds of those who took part in the study said this was due to a rise in material costs, whereas 40% reported rising labour costs and 25% said sub-contractors’ prices had gone up. Other specific cost increases reported include expenditure on: • floor beams • bricks and blocks • the impact of exchange rates on imported prices • insulation • roof tilers • scaffolders • bricklayers • dry liners • plumbers • electricians Many in the industry, including the Royal Institution of Chartered Surveyors (RICS), believe that generally, material costs are rising due the lower value of the pound. Whereas, labour costs are increasing due to the high-demand for tradespeople as a result of a skills shortage. Those surveyed also stated they thought prices would continue to rise and expected costs to rise a further 1% in the second quarter of 2017. The Latest on the Skills Shortage Saga RICS reports that in Q1 2017 27% of respondents saw their workloads increase and 34% said they had seen an increase in private housing output, however the commercial sector saw the highest growth. Although positive for business, this has only highlighted the skills shortage. 53% of respondents told RICS that a shortage of skilled labour was the main reason restricting their growth – a 3% rise on the last quarter. A further 65% said there was insufficient availability of quantity surveyors. This high-demand has therefore allowed skilled workers to charge higher fees for their time. Think You’ll Need Development Finance? Don’t let rising house development costs get in the way of your success. If you’re planning a project soon and require development finance, we can get you a competitive broker-only deal tailored to your individual circumstances. Intrigued? Give us a call on 02920 766 565 to speak to one of our property development finance brokers about what we can do for you. Read more: I’ve Bought a Plot of Land… Now What? How to Fund Additional Investment Properties What Are the Rules Regarding Building on Green Belt Land?