2 September 2022

Cost of building new homes in UK accelerating significantly

By Self Build Zone

Research, undertaken by the Centre for Economics and Business Research (CEBR) for the housing association trade body National Housing Federation (NHF), has revealed that the cost of building new homes was rising by 12.3% a year in June 2022, well above the general CPI rate, the government’s preferred inflation measure, which hit 9.4% that month.

CEBR has analysed inflation trends for the major costs housing associations face.

The analysis shows that in significant areas – including construction costs and repairs and maintenance materials – costs are increasing more than headline inflation rates.

NHF Chief Executive Kate Henderson said:

“This report demonstrates the huge financial pressures housing associations are currently facing with the cost of repairs materials and building new homes already rising well above inflation by 14% and 12.3% respectively.

“This is likely to worsen over the coming months, feeding through to all areas of spend and is on top of the pressures of building safety costs and the costs of retrofitting homes. We know there will be particular challenges for supported housing providers who operate on very tight margins.

“Housing associations must ensure they can continue to maintain their homes and provide vital services to residents in the years ahead. They are also concerned about the impact rising living costs are having on social housing residents.

“In this context they been thinking very carefully about their approach to future rents and actively looking at what additional support they put in place for residents.”

The research comes as the government is expected to launch a consultation on plans to cap the amount by which housing associations can increase their rents by next year, in a bid to protect tenants from the impact of the cost-of-living crisis.

The same external pressures that have an impact on domestic life will also affect the construction industry as a whole, from supply chain issues to labour shortages. As prices sky-rocket, those housing associations, house developers, self-builders already building or planning new build developments need to factor in soaring costs. It is also vitally important to have the necessary insurances in place to help protect construction projects, particularly an all risk site insurance policy which is Contractors’ all risk insurance which is a single policy that encompasses other common types of project insurance, including contract works and public liability cover.

Make sure your project is covered and request a site insurance, contractors all risk insurance quote here: Self-Build Zone.

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