Annual growth construction cost in the UK 2015-2024

The construction output price in the United Kingdom has reached an annual growth rate of 1.9 percent in June 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 65 percent of the sector's earnings in the United Kingdom in 2022. Between 2019 and 2022, 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.