House-building cost inflation steady at 1.7%

The BCIS Private Housing Construction Price Index (PHCPI) for the fourth quarter of 2023 stood at 1.7%, the same as in the third quarter.

Its most recent peak was 15.3% in spring 2022.

In Q4 2023, private new housing output was down by 8% on the previous quarter, or by 22.5% on the same quarter a year earlier.

One of the respondents to the PHCPI survey noted delays in the planning system as a concern, particularly relating to shortages in planning staff dealing with reserved matters applications.

In the spring budget, the chancellor allocated £3m to match industry funding for a skills and education programme to attract more people to take up roles as local planners in planning authorities.

Data published by the Department for Levelling Up, Housing & Communities shows that in Q4 2023, district level planning authorities in England received 85,200 applications for planning permission, down 9% from Q4 2022.

They decided 80,700 applications, down 12% on the year.

There was also commentary from the survey panel around associated costs of meeting Part L, the energy efficiency requirements of the building regulations. One respondent suggested this could bring as much as a 10% uplift on future projects.

Looking to the first quarter of 2024, the house-builders surveyed said they expected to see only a slight increase in costs, an average of 0.3%.

BCIS chief economist David Crosthwaite said: “Although headline inflation has eased, with the Bank of England’s base rate held at 5.25%, household budgets stretched and no significant housing stimulus included in the spring budget, residential output is likely to be impacted for some time.”

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