The construction output price in the United Kingdom has reached an annual growth rate of two percent in September 2024. Construction costs have been increasing at a lower rate than in 2022 and 2023. The year-over-year growth rate reached over 10 percent in May and June of 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 53 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 58 percent of the sector's earnings in the United Kingdom in 2023. In the past years, the size of labor costs as a share of the construction sector rose by more than three percentage points, indicating that labor costs have increased at a faster rate than the overall revenue of the industry.

From 2015 to the first quarter of 2024, the construction output prices of public and private housing increased by 46 percent in the United Kingdom (UK). Meanwhile, the prices of industrial buildings increased by 41 percent, and infrastructure prices by 37 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.

Construction Output Price Indices (OPIs) from January 2014 to December 2024, 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).

Construction Material Prices

The construction market intelligence (CMI) unit publication, ‘Monthly statistics of building materials and components’, presents the latest detailed information on selected building materials and contains monthly data on price indices, bricks, cement and concrete blocks. It also contains quarterly data on sand and gravel, slate, concrete roofing tiles, ready-mixed concrete and imports and exports of construction products.

Data are derived from a Department for Business, Innovation & Skills monthly Building Materials and Components statistical release.

Construction Wage Costs

The Index of Labour Costs per Hour (ILCH) is a measure of the cost of having an employee for an hour of work. It represents the total cost of employing an individual, which is primarily the earnings of the employee, but also includes non-wage costs. It is also known as the Labour Cost Index (LCI); the index is produced by all member countries of the EU and collated by Eurostat.

Data are derived from ONS data releases found here.

The prices of many construction materials in the United Kingdom kept increasing in 2024, but more moderately than in previous years. There were also several building materials whose prices fell that year. One of the most extreme examples was the price of flexible plastic pipes and fittings, which rose by over 14 percent that year. The price of a couple steel products fell by over 10 percent that year. In late 2024, copper-based products were among the building materials with the highest price increases in the U.S.

Building materials made of steel, copper and other metals had some of the highest price growth rates in the U.S. in early 2025 in comparison to the previous year. The growth rate of the cost of several construction materials was slightly lower than in late 2024. It is important to note, though, that the figures provided are Producer Price Indices, which cover production within the United States, but do not include imports or tariffs. This might matter for lumber, as Canada's wood production is normally large enough that the U.S. can import it from its neighboring country. Construction material prices in the United Kingdom Similarly to these trends in the U.S., at that time the price growth rate of construction materials in the UK were generally lower 2024 than in 2023. Nevertheless, the cost of some construction materials in the UK still rose that year, with several of those items reaching price growth rates of over five. Considering that those materials make up a very big share of the costs incurred for a construction project, those developments may also have affected the average construction output price in the UK. Construction material shortages during the COVID-19 pandemic During the first years of the COVID-19 pandemic, there often were supply problems and material shortages, which created instability in the construction market. According to a survey among construction contractors, the construction materials most affected by shortages in the U.S. during most of 2021 were steel and lumber. This was also a problem on the other side of the Atlantic: The share of building construction companies experiencing shortages in Germany soared between March and June 2021, staying at high levels for over a year. Meanwhile, the shortage of material or equipment was one of the main factors limiting the building activity in France in June 2022.

Price quote data (for locally collected data only) and consumption segment indices that underpin consumer price inflation statistics, giving users access to the detailed data that are used in the construction of the UK’s inflation figures. The data are being made available for research purposes only and are not an accredited official statistic. From October 2024, private school fees and part-time education classes have been included in the consumption segment indices file. For more information on the introduction of consumption segments, please see the Consumer Prices Indices Technical Manual, 2019. Note that this dataset was previously called the consumer price inflation item indices and price quotes dataset.

Revisions triangles for monthly construction output indices in Great Britain.

United Kingdom Construction Material Price Index: Repair and Maintenance data was reported at 122.600 2010=100 in Oct 2018. This records an increase from the previous number of 122.200 2010=100 for Sep 2018. United Kingdom Construction Material Price Index: Repair and Maintenance data is updated monthly, averaging 108.200 2010=100 from Jan 2008 (Median) to Oct 2018, with 130 observations. The data reached an all-time high of 122.600 2010=100 in Oct 2018 and a record low of 88.600 2010=100 in Jan 2008. United Kingdom Construction Material Price Index: Repair and Maintenance data remains active status in CEIC and is reported by Department for Business, Innovation and Skills. The data is categorized under Global Database’s United Kingdom – Table UK.I028: Construction Material Price Index: 2010=100.

Revisions triangles for monthly construction output indices in Great Britain.

In 2023, the cost of work in the construction sector in the United Kingdom (UK) represented around 58 percent of that industry's income. This measure, also known as labor share of income, has fallen significantly in 2022 and 2023. The relative cost of staff peaked in 2009, when it represented approximately 73 percent of the construction income. Two key factors can affect these figures: the evolution of construction salaries in the UK and the overall income of the industry. In times of inflation, a decline in the labor share of income could signal that the cost of work has increased at a slower pace than construction prices.

Sales of construction supplies are driven by the level of commercial and residential construction and renovation activity, construction material prices and private consumption. Construction material prices surged over the two years through 2022-23 due to the supply disruptions arising from the Russia-Ukraine conflict. Due to economic uncertainty and rising costs, the construction industry is facing a tough time with fewer new projects. However, there's a silver lining as demand for repair and maintenance work is on the rise, which has helped keep the overall construction supplies output steady. Competition among wholesalers is fierce, especially for those offering durable and cost-effective solutions. While high energy prices have been a hurdle, the recent stabilisation in material costs due to falling pressure in inflation offers some breathing room. In 2024-25, optimism in the construction sector is growing, driven by falling material prices, with revenue anticipated to climb by 4.1% over the year. Falling material prices are also set to improve the industry’s average profit margin. Several social infrastructure frameworks, like the New Hospital Programme and the School Rebuilding Programme, have provided a much-needed inflow of demand for construction supplies. Industry revenue is forecast to inch upwards over the five years through 2024-25 at a compound annual rate of 0.2% to reach £40.5 billion. Looking forward, several opportunities present themselves to construction supplies wholesalers. The government’s commitment to tackling the housing shortage will foster sales to residential building contractors. To meet the government's aim of decarbonising the UK's power system by 2030, construction investments will be poured into constructing renewable energy systems, boosting demand for wholesalers. Sustainably sourced or energy-efficient materials will climb in popularity, likely supporting a widening profit margin. Over the five years through 2029-30, revenue is forecast to grow at a compound annual rate of 5.4% to reach £52.8 billion.

The prices of machinery for mining, quarrying, and construction in the United Kingdom soared in 2022 and continued to rise in 2023. According to the Producer Price Index (PPI), the cost of that the equipment and machinery used in those industries increased by 17.86 percent from 2021 to 2022. The value of the index was set at 100 in 2015.

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

The financial and operational success of property development markets depends on a range of socio-economic factors, such as property values, market sentiment and credit conditions. Building project developers' revenue is forecast to slide at a compound annual rate of 3.2% to £35.8 billion over the five years through 2024-25. The economic shock caused by the pandemic had a devastating impact on property development market in 2020-21. Severe supply chain and market disruption caused sentiment to wane and transaction activity fell, while property values initially depreciated and rental fee income stalled. Revenue rebounded in 2021-22, aided by low interest rates, house price inflation and a stronger than anticipated initial economic recovery from the pandemic. Nonetheless, revenue remained below pre-pandemic levels as growth was hindered by a further net deficit on revaluation of assets and lower rental income in office and brick-and-mortar retail markets. The fallout from the pandemic has caused developers to re-align investment towards lower-risk real estate markets which are likely to be more resilient to price shocks. Inaflationary pressures and rising interest rates spurred a further hit to portfolio valuations, discouraging developers from pursuing new developments. Revenue is forecast to grow by 2.5% in the current year, as interest rate cuts spur renewed growth in property values. Revenue is slated to climb at a compound annual rate of 1.3% to reach £38.2 billion over the five years through 2029-30. Following recent interest rate cuts, more stable economic conditions are set to continue to support improved sentiment in the near-term, spurring developers to pursue new ventures. Opportunities for growth are set to be most prominent in high-yield office markets and the technology sector, with growing use of artificial intelligence set to drive demand for the development and construction of data centres. Loosened planning policy is set to drive momentum in residential real estate markets, though more will need to be done for the government to achieve ambitious housebuilding targets.