Fernando de Querol Cumbrera
Research expert covering construction, loans, leasing, savings, and debt
Construction costs in Europe - statistics & facts
During the past years, the rise in construction costs has been very relevant for the whole industry in Europe and in other countries. To determine the costs which contractors are going to incur, they need to know the price of the components needed to erect a building. There are many elements that can affect the final price of a project such as the workers’ salaries, construction materials, equipment and machinery rental fees, or land prices among others. Those components explain the varying costs of constructing a building across Europe, with cities such as Geneva among the most expensive and Warsaw among the cheapest.
Building material disruptions
Between 2020 and 2023, supply chain disruptions, rising energy prices, inflation, and a volatile construction sector affected the price of building materials, which in turn increased the overall construction costs. Some of the building materials with the highest price increases in Germany in 2023 were made out of steel or iron. Nevertheless, there were other raw materials, which did not suffer such strong price fluctuations, or whose price actually decreased slightly. Still, those prices can be quite different in each European country. In 2023, the building materials with the largest price increases in Italy were cement, lime, and plaster.How are construction costs calculated?
Some indicators used to know the cost of construction activities directly show the price of a certain type of building or construction material per square meter or metric ton. However, price indices are also very widely used throughout all Europe to indicate how the cost of a certain product has increased. For example, according to the output price index of new constructions work in the UK, the cost of housing reached an index value of 146 points in the first quarter of 2024. Given that the value of that index was set at 100 in 2015, we would be able to determine that there has been a price increase of roughly 46 percent during that period. Output price indices measure the cost of the whole construction project once it has been completed. Meanwhile, some other indices take into account the cost of the materials, labor, and other components needed to complete that project instead. An example of that last type of indicator is the input price index of housing construction in the Netherlands.
