The rising cost of building materials, including timber, will see housing construction costs continue to rise in 2008, Cala Finance has reported.
Cala Finance, the residential development funding arm of developer Cala Group, said that the cost of materials rose by 3% in the first half of 2007 following a 10% hike in 2006, with timber prices up by more than 15%. This saw construction costs up by 8.75% in 2007.
This was particularly prevalent in the Yorkshire area, where the average cost of building a house has risen by as much as 28.5% since 2003, according to Cala Finance.
However, it added that a shortage of labour, which had driven up wages, and a discrepancy between the number of large projects and contractors willing to take on housebuildng jobs had also driven up costs.
“The situation is particularly acute for residential developers who employ main contractors, rather than those which retain their own workforce,” said David Whittaker, managing director of Cala Finance’s Yorkshire and north-west England branch.
“There also appear to be fewer main contractors willing to take on housebuilding jobs, and as a result there has been a significant increase in their tender prices, even upwards of 10%.”
Mr Whittaker added that the situation is “unlikely to change in the foreseeable future” as the government continues to set “stringent targets” for the use of eco-friendly and sustainable materials, “which are still relatively expensive”.
