The construction output price in the United Kingdom has reached an annual growth rate of *** percent in June 2025 compared to the same month of the previous year. Construction costs had been increasing at a lower rate than in 2022 and 2023, but started rising again slowly in late 2024. The year-over-year growth rate was over ** percent in May and July 2022. Public and private housing was the construction segment with the highest output price increase. How have material costs developed over the years? Several factors influence construction material costs, including supply and demand, regulatory requirements, and transportation logistics. Manufacturing efficiency and global trade policies also play a big part, along with economic factors like inflation and currency fluctuations. In June 2022, the price of construction materials for new houses in the UK were ** percent higher than in 2015. What is the largest component of those costs? Labor costs are often one of the largest expenses in construction projects. That is due to the skilled nature of the work, which has a high demand for specialized trades. The construction sector's labor costs accounted for around ** percent of the sector's earnings in the United Kingdom in 2024. In the past years, the size of labor costs as a share of the construction sector have increased slightly, but they were still lower than in before 2014. As of June 2025, the construction output price growth rate has been revised to *** percent.

Construction Output Price Indices (OPIs) from January 2014 to September 2025, UK. Summary

This dataset contains the indices of UK hourly Construction Wage Costs (quarterly; not seasonally adjusted; 2000 = 100) and UK Construction Material Prices for New Housing, Other New Work, Repair and Maintenance, and All Work (monthly; 2010 = 100).

In 2024, there were approximately 36,000 job vacancies in the construction sector in the United Kingdom. In 2022, the labor demand for construction reached its highest point throughout the timeline. The number of openings in the industry also peaked in 2007 with 26,000 vacancies, coinciding with the end of the housing bubble.

In 2024, London had the highest housing construction costs for residential buildings in the United Kingdom. The expense of building an apartment high-rise in the UK's capital amounted to ***** British pounds per square meter of internal area, while the cost of townhouses were ***** British pounds per square meter. Manchester was the second city on the list with the highest residential construction costs.

Between 2018 and 2021, the cost of construction materials mostly increased in the United Kingdom. There was only a small decrease in their price in 2020. In 2021, the costs reached a *** percent growth rate. Moreover, building materials costs are expected to grow by **** percent in 2022. Nevertheless, these figures were calculated at the end of 2021, and therefore do not reflect the developments seen afterwards.

In 2024, London had the highest construction costs for manufacturing facilities and warehouses among the cities of the United Kingdom included in this list. Building an advanced industrial plant in Manchester cost ***** British pounds per square meter. The figures in Leeds, Birmingham, Glasgow, and Manchester were somewhat similar. Certain areas of London, such as Park Royal, Canning Town, and Acton, had some of the highest rent of new small warehouse units in the UK in 2022. What factors determine construction costs? The cost of labor in construction in the UK amounted to nearly ********** of the overall income in that sector. Apart from the salaries of employees and workers, the price of land and machinery are also quite important. Another element that can be subject to a lot of change is the price of building materials, with the price of concrete re-inforcing bars in the UK growing by nearly ** percent in 2022. However, construction projects also face other costs, such as fees and other administrative costs. Industrial land prices Some components that affect the final cost of constructing warehouses and manufacturing facilities can vary a lot within the same country. For example, salaries tend to be higher in large cities. Along the same lines, the price of industrial land in North London was well over *** times higher than in Edinburgh in 2022. However, these disparities are not as pronounced in every country. Although certain areas of Warsaw had very high prices, industrial and warehouse land prices in other Polish cities such as Poznan, Wroclaw, or Krakow were higher than in the zone III of Warsaw.

BCIS forecast data showing 15% construction cost increases over five years, broken down by labour costs (16% increase), materials (13% increase), Building Safety Act compliance costs, and programme extension impacts on SME residential developers

This article reports on work to develop and test improvements to the methodology and reporting of the construction price and cost indices. Source agency: Business, Innovation and Skills Designation: Supporting material Language: English Alternative title: Improvements to the Construction Price Indices and impacts

NB Responsibility for the production of PCIs transferred to the Office for National Statistics (ONS) on 1 April 2015. See: http://www.ons.gov.uk/businessindustryandtrade/constructionindustry/articles/constructionoutputpriceindicesopis/interimsolutionquarter4octobertodecember2015 Presents quarterly price and cost indices are a basic tool of the trade to anyone involved in estimating, cost checking and fee negotiation on public sector construction works including roads. Source agency: Business, Innovation and Skills Designation: National Statistics Language: English Alternative title: Construction Price and Cost Indices

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Economic uncertainty and inflationary pressures have spurred a degree of instability in the UK economy in recent years. This has made private investors reluctant to dedicate significant spending towards capital ventures, weighing on lead generation in commercial building construction markets. High construction costs and rising interest rates have created further apprehension among property developers to engage in new ventures, though long-term government capital procurement frameworks have provided some resilience to wavering private investment. Aided by the release of pent-up demand and a stronger-than-anticipated initial economic recovery from the pandemic, the industry recorded a strong rebound in new orders in 2021-22, particularly in private commercial and private industrial markets. However, capacity constraints and the impact of reduced new work volumes secured during the height of the pandemic limited output growth. Growth in new order volumes slowed in 2022-23, as economic uncertainty compounded and rising tender prices reduced the propensity of investors to commit to commercial real estate ventures. High borrowing costs continued to weigh on investor sentiment in 2023-24, with interest rates hitting 5.25% in August 2023, according to the Bank of England. However, a steady stream of work on projects procured through capital procurement frameworks, including Procure23 and the School Rebuilding Programme, has bolstered revenue growth for publicly funded buildings. Overall, revenue is expected to climb at a compound annual rate of 3.6% over the five years through 2025-26 to £21.6 billion, despite a forecast dip of 1.4% in 2025-26 as inflationary pressure hits demand. Revenue is slated to swell at a compound annual rate of 1.1% over the five years through 2030-31 to reach £22.9 billion. The effects of the UK's economic slowdown will continue to bite in the near term as weak order books limit remuneration. Still, commitments made by the government as part of capital procurement frameworks will continue to support demand for commercial building contractors in the coming years, while private-sector order books should improve as borrowing costs come down. Although input price inflation is set to continue to ease in the medium term, material costs are likely to remain elevated and a construction worker shortage will pressure profit. According to the Building Cost Information Service, material costs are anticipated to grow by 15% in the five years through Q3 2030.

In 2024, ****** was still the most expensive UK city for office construction. This was true at least for the cities included in the list, and it applies to prestige and A-Grade offices. Both A-Grade and prestige offices in London were more expensive than any type of office construction in Birmingham, Manchester, Glasgow, or Leeds. After London, Cambridge and Oxford are also some of the other UK cities with the highest house prices in 2023. Office rents in London Not only did London prove to have high building costs, rents for prime offices were equally high, with the West End core as the most expensive districts in the city. The area to the North of Buckingham Palace is known for its exclusive townhouses largely owned by the foreign elite and upscale hotels and restaurants. Stratford and the rest of the Docklands were the cheapest districts in London. Office investments in the UK In the last quarter of 2023, the value of office investments in London increased slightly in comparison to previous quarters. Investments in the City and Southbank, however, dropped in value. The volume of investment in commercial real estate in the UK fluctuated a lot in the past months, with some years showing high volumes of investment in office real estate, and other months where those values fell rapidly.

From 2015 to 2024, the construction output prices of public and private housing increased by ***** percent in the United Kingdom (UK). Meanwhile, the prices of industrial buildings increased by ***** percent during that period, and infrastructure prices by ***** percent. Housing and industrial are the segments that increased the most during that period. Balfour Beatty ranked in the past years as the construction firm with the largest revenue in the UK.

Building contractors and developers depend on various socio-economic factors, including property values, underlying sentiment in the housing market, the degree of optimism among downstream businesses and credit conditions. All of these drivers typically track in line with economic sentiment, with recent economic shocks spurring a difficult period for building contractors and developers. Nonetheless, the enduring need for building services, particularly to tackle housing shortages across the continent, ensures a strong foundation of work. Revenue is forecast to grow at a compound annual rate of 2.3% to reach €1.3 trillion over the five years through 2025. Operational and supply chain disruption caused by the pandemic reversed the fortunes of building contractors and developers in 2020, as on-site activity tumbled and downstream clients either cancelled, froze or scaled back investment plans. Aided by the release of pent-up demand and supportive government policy, building construction output rebounded in 2021. Excess demand for key raw materials led to extended lead times during this period, while input costs recorded a further surge as a result of the effects of rapidly climbing energy prices following Russia’s invasion of Ukraine. Soaring construction costs and the impact of interest rate hikes on both the housing market and investor sentiment led to a renewed slowdown in building construction activity across the continent. However, falling inflation and the start of an interest rate cutting cycle have spurred signs of a recovery in new work volumes, supporting anticipated revenue growth of 2.3% in 2025. Revenue is forecast to increase at a compound annual rate of 6.7% to €1.7 trillion over the five years through 2030. Activity is set to remain sluggish in the medium term, as weak economic growth and uncertainty surrounding the impact of the volatile global tariff environment on inflation and borrowing costs continue to weigh on investor sentiment. Contractors and developers will increasingly rely on public sector support, including measures to boost the supply of new housing, as countries seek to tackle severe housing shortages. Meanwhile, the introduction of more stringent sustainability requirements will drive demand for energy retrofits.