Apr 23

Building Costs Per Square Metre in the UK / England and Wales

Building Costs Per Square Metre in the UK / England

A newly built 4 bedroom detached house for sale (£640,000) in Shillington village, Hitchin, Hertfordshire SG5, UK developed by Status Homes Limited, a registered NHBC building contractor – Source Zoopla UK

The building costs per square metre in the UK (United Kingdom) depend on the location and type of house or building that you want to build. UK countries include England, Northern Ireland, Wales and Scotland. The costs of building will vary in these countries. As a rough guide, for the same building design and material specifications, a house in England will be:

  • 25% to 45% more expensive than a house in Northern Ireland.
  • 1% to 21% more expensive than a house in Wales.
  • 8% to 12% more expensive than a house in Scotland

In this post, we shall analyze the building costs in England alone. There are nine regional provinces in England and the construction costs per square metre will vary as expected. That’s why you have to include a range when comparing costs with other UK countries. Within the regions, you will have counties, cities and towns with numerous local authority districts. As an example, Greater London has 32 local authority districts. There are about 349 local planning authorities in England, also known as councils. The superficial floor area cost of residential developments is not the same in these districts. The difference in cost will vary by as little as 2%, and as much as 105%. The cost range released by the local councils in 2016 is £917.00 to £ 19,439.00 per square metre. To get the building rates for the current year, you have to update the previous cost/m2 by multiplying the base rate with the percentage increase or decrease in the construction index, and then adding the resultant value to the previous rate.

As you can see, location has a great bearing on the cost of building a house or any type of residential or commercial property. Cities and districts like Camden, Hammersmith, Fulham, Kensington, Chelsea and Westminster are very expensive to build, requiring a minimum of £10,000 per square metre.

Low-cost locations with affordable / economical building rates are in the range £900 to £1400 per square metre. These include Hartlepool, Middlesbrough, Redcar, Cleveland, Lincolnshire, Stoke-on-Trent, Darlington, Halton, Kingston Upon Hull, Allerdale, Barrow-in-Furness, Carlisle, Copeland, Burnley, Hyndburn, Pendle, Rossendale, Rochdale, Oldham, Knowsley, Liverpool, St Helens, Barnsley, Doncaster, Rotherham, Sunderland, South Tyneside, Carmarthenshire, Neath Port Talbot, Swansea, Rhondda Cynon Taf, Blaenau Gwent and Methyr Tydfil.

Regional Costs of Building in England

An analysis of regional costs shows that the South West, Midlands and North West provinces are cheaper to build than other regions. Central London is the most expensive, followed by Outer London, South East and Northern England. A new house estimated at £X in the South West region will cost the following in other regions:

  1. South West – X
  2. Midlands – X     
  3. North West – X
  4. East Anglia – 2% more than X
  5. Yorkshire – 6% more than X
  6. Northern England – 9% more than X
  7. South East – 9% more than X
  8. Outer London – 13% more than X
  9. Central London – 20% more than X

Building Costs in UK – International Construction Market Surveys

Turner and Townsend Building Costs Survey

Turner and Townsend Partners LLP is an international construction cost consulting and management company with over a hundred offices in 44 countries. Their headquarters are situated in Leeds, UK. The company provides cost consulting, project management and cost control administration services across various industries such as building, infrastructure, real estate, property development, oil and energy. The Turner and Townsend annual building cost survey is carried out in 46 global markets including the United Kingdom.

Turner and Townsend UK London Building Costs Per Square Metre 2018_Chart
Turner and Townsend UK_Other Regions Building Costs Per Square Metre_2018_Chart

AECOM Property & Construction Cost Survey

AECOM is a global American multi-disciplinary company, providing services in construction, design, engineering, management, cost consulting, risk and asset management. Operating across all continents, this multinational firm has clients in civil, government and private sector. It has a large number of mega projects in its portfolio such as the Hong Kong, Los Angeles and Abu Dhabi International Airport. AECOM produces an annual construction cost survey of various markets around the world where its offices are located. This includes the United Kingdom.

AECOM London UK Property and Construction Cost Guide 2018

EstimationQS Property Cost Survey

EstimationQS is a building cost estimating and quantity surveying firm. The EstimationQS building costs are based on valuations (selling prices) of newly finished properties. This is a very rough guide for quick survey purposes.

England Regional Building Costs Per Square Metre for New Housing

New Housing Building Costs Per m2_England Regions UK

North East

MIN – £987 per m2

MAX – £1,714.00 per m2

AV- £1,290.42 per m2

Yorkshire and Humber

MIN – £1,114.00 per m2

MAX – £2,655.00 per m2

AV – £1,638.81 per m2

East Midlands

MIN – £1,184.00 per m2

MAX – £2,734.00 per m2

AV -£ 1,776.76 per m2

West Midlands

MIN – £1,124.00 per m2

MAX – £3,167.00 per m2

AV – £1,922.47 per m2

South West

MIN – £1,789.00 per m2

MAX – £3,588.00 per m2

AV – £2,497.03 per m2

East of England

MIN – £1,629.00 per m2

MAX – £5,836.00 per m2

AV – £3,223.87 per m2

South East England

MIN – £2,188.00 per m2

MAX – £6,115.00 per m2

AV – £3,669.24 per m2

North East

MIN – £992 per m2

MAX – £1,714.00 per m2

AV – £1,407.00 per m2

North West

MIN – £838 per m2

MAX – £2,557.00 per m2

AV – £1,485.00 per m2

London

MIN – £3,994.00 per m2

MAX – £19,439.00 per m2

AV – £7,773.12 per m2

Wales

MIN – £777 per m2

MAX – £2,161.00 per m2

AV – £1,350.69 per m2

New Housing Building Costs Per m2_Wales_UK
New Housing Building Costs Per m2_South West_England_UK
New Housing Building Costs Per m2_South East England_UK
New Housing Building Costs Per m2_North West England_UK
New Housing Building Costs Per m2_North East England_UK
New Housing Building Costs Per m2_London England_UK
New Housing Building Costs Per m2_East of England_UK
New Housing Building Costs Per m2_East Midlands_England_UK
New Housing Building Costs Per m2_Yorkshire and the Humber_England_UK

UK Household Income vs Building Costs By Region

Does the building cost per square metre in Great Britain (England) correlate with the average household income in a selected region? Does a high regional Gross Disposable Household Income (GDHI) mean that the regional home building costs are comparatively higher? Do low-income areas have cheaper building costs per square metre? This is an interesting question that calls for research. In most cases, experience shows that affluent regions are teaming with luxurious, exclusive and exceptional private homes which are more expensive to build than homes in low and middle income regions. Try taking a tour of affluent locations in your city, you will find a high level of custom specification designs and unique architecture. The charts below show a comparison of regional household income versus building costs in various regions of England in Great Britain:

Average Building Costs Per m2 By Region_England_Wales_UK
Gross Disposable Household Income GDHI Per Head By Region_England_Wales_UK
Maximum Building Costs Per m2 By Region_England_Wales_UK
Minimum Building Costs Per m2 By Region_England_Wales_UK

The charts do in fact show a correlation between the Gross Disposable Household Income (GDHI) per head and the Building Costs Per Square Metre for new housing in England and Wales. The minimum, maximum and average building costs per m2 depict a curve which is similar to the GDHI per head. The North East, North West and Wales have the lowest values for these two parameters, hence the Household Income per head and the Building Costs are the lowest in England in these regions. The South West, East of England and South East have what you could call high building rates and high household income per capita. The most expensive place to build is the London region and the graph shows this place also has the highest household income per capita in England.

Building Methods used in the UK

The method of building your choose has a significant bearing on the total contract sum. The traditional building materials used in the United Kingdom are bricks and blocks. This is the most common building method found in about 70% of home building projects. Cavity walls (also known as brick veneer walls) consisting of an inner and outer skin are preferred, but you can also have half, one and one-and-a-half brickwalls in single skins. Cement-sand mortar in 1:3 mix is used to bind the bricks together. A standard mortar joint is 10mm thick. The outer layer of a veneer wall is non-load bearing while the inner layer is a structural wall with load bearing function.

The most popular alternatives to block and brickwork in the UK are timber and timber/steel panel systems. The timber frame building method is found in 15% of new home building projects in Great Britain. NHBC has detailed statistics on construction methods used in the UK. The bar chart below shows the percentage of new homes that are built using either masonry, timber frame, light steel frame and other methods. The period of the survey, 2008 to 2015 shows a consistent trend, with brickwork maintaining its position as the most popular building method.

NHBC Statistics of Popular Construction Methods in the UK

Masonry houses will cost a lot more to build than timber frame construction, panel systems and volumetric construction (prefabricated modular units and containers). At the same time, masonry construction takes a longer time to complete than the later. The project can be delayed by unfavourable weather conditions such as snow, rain and storms.

Building Design and Material Specifications for UK Climate

The weather/climate in the UK is generally wet and rainy. Rain falls throughout the year, with minimal rainfall observed in only 4 months and above-average rainfall in the rest of the year. Building methods that are suitable for wet and rainy conditions should be used, for example brick veneer walls are a good solution for draining away water that seeps through the cavity. The engineer should pay attention to the floor level. It must be elevated to a suitable height to prevent rainwater flooding. The ground (sub-base and sub-grade) must be kept dry to prevent water logging. A suitable drainage system should be installed. Adequate waterproofing of the floor, walls and roof should considered to prevent water absorption and penetration.

Construction Cost Index (Materials + Labour) UK (2016 – 2018)

The building cost index is derived from material and wage costs. The construction index for new housing in the UK has been steadily rising since the beginning of 2016. The CI was 111.4 in December 2016, climbing to 118 in December 2017, an increase of 5.9%. The last recorded index in 2018 was 120.6 in May, which is an increase of 2.2% from 2017. The overall increase in costs over the two-year span is 8.26%.

When you need to update your construction cost estimate to the current index, you have to apply an adjustment factor as follows:

Cost for Current Year = Cost for Base Year x [Index for Current Year / Index for Base Year.]

In this case, the base year is 2016 and the current year is 2018.

Construction Output Price Index UK (2016 – 2018)

The building output price index is based on tender price indices. Construction output is work done during the contract stage of a project, therefore the Output Price Index (OPI) is a measurement of price fluctuations during work in progress on sites over a specified period. The period over which the price fluctuations are measured can be quarterly as in the BCIS guide. However, since 2014, BCIS is no longer publishing these indices. The UK Office for National Statistics (ONS) has taken the role of publishing OPIs. A formula entailing the Tender Price Index (TPI), value of new orders (NO) within a period (n), and a weighting (w) is used to calculate the OPI.

Construction Output_Price_Index 2014 to 2018 UK
Construction Output_Price_Index 2016 to 2018 UK

ONS measures output price fluctuations over a quarterly period, that is every 3 months. From the beginning of 2016, the construction output price index for new work (private and public housing) has been gradually rising with small increments every month. The end of year OPI for 2016 was 104.2 in December. In December 2017, it rose to 108.5. It continued to rise by the end December 2018, ending at 112. The overall percentage increase in the price of work done during the two-year period was 7.5%.

Construction Output Volume in the UK

Construction is one of the industries contributing to the growth of the GDP in the UK. The amount of construction work done in the UK is about 6% of the GDP. The charts below indicate the value of construction output volume for new housing projects (private and public residential homes) that you can expect per month or per year in Great Britain. The value is in £million (GDP), so you have to add the £million suffix when reading the figures. The monthly volume bar graph shows a gradual increase in the amount of work since the beginning of 2013 up to February 2019. The total volume of work done in February 2013 was 1,837 million GDP (18.37 billion GDP). In 2016, the volume was 2,960 million GDP in the month of February. For the same month, the figure was 3,257 million GDP in 2017. The amount climbed to 3,544 million GDP and 3,698 million GDP during the same month of February in 2018 and 2019 respectively. These are seasonally adjusted volumes by sector as prepared by ONS. The year 2018 had very consistent monthly volumes, the lowest month was £3,374 million and the highest month was £3,671 million.

Construction Output Volume_New Housing_Monthly Values_UK
Construction Output Volume_New Private Housing_Monthly Values_UK
Construction Output Volume_New Public Housing_Monthly Values_UK

There were only two months which defied the upward trend in the year 2018. These are April and December. The conclusion is that the construction output monthly volumes for new housing projects seem to be following a rising trend for the period ending February 2019, which ended with the highest record at £3,698 million.

Construction Output Volume_New Housing_Yearly Values_UK
Construction Output Volume_New Private Housing_Yearly Values_UK
Construction Output Volume_New Public Housing_Yearly Values_UK

The evidence of this rising trend can be clearly seen on the annual construction output chart which shows the total volume of work done during a single year. The total annual volume of work done was valued at £36,291 million, £40,571 million and £42,273 million in 2016, 2017 and 2018 respectively.

BarChat_Construction Output_Pie Chart_UK_February_2019
BarChat_Construction Output_Pie Chart_UK_February_2019_New Work_Maintenance
BarChat_Construction Output_UK_February_2019

Notes***The volumes used in these statistics are seasonally adjusted by sector as prepared by ONS (Constant prices).

Volume of New Construction Orders in the UK

In the UK statistical survey of construction activity produced by ONS, the term construction orders refers to the number of contracts awarded to contractors for construction work. This is different from Construction Output which measures the amount of valued work in progress or work done on site within the UK region.

The volume of new orders is basically the contract amounts agreed in the final bid or tender for all proposed projects in the UK. The bar chart below shows that the quarterly volume of construction orders for new housing (private and public sector houses) between 2013 and 2018 maintained an average line with declines from the first quarter of 2014 to the third quarter of 2015 being compensated by a rise in the fourth quarter of 2015 and higher values from there on, up to the first quarter of 2018 which registered the highest peak in this 5-year span. After the peak, a downward trend ensured up to the end of the last quarter of 2018.

New Construction Orders_New Housing_Quarterly Values_UK

The first quarter of 2013 began with 3,356 million GBP worth of new orders. The first quarter of 2014 had new orders to the value of 3,816 million GBP. The third quarter of 2015 had 3,156 million GBP in orders. Orders climbed to 3,784 million GBP in the fourth quarter of 2015. The highest peak was observed in the first quarter of 2018, at 4,297 million GBP. The last quarter of 2018 ended with 3,435 million GBP in order volume.

New Construction Orders_New Private Housing_Quarterly Values_UK

Private sector housing maintained a consistent showing, with effort being made to stay above the average volume after a decline was registered in the first quarter of 2016. A significant rise in volume was seen in the second quarter of 2016, and the highest peak was observed in the first quarter of 2018.

New Construction Orders_New Public Housing_Quarterly Values_UK

Public sector housing shows a totally different trend. As you can see on the bar chart, the overall volume of orders has been sharply declining throughout the 5-year period, although there are intermittent rise and falls in between. The highest peak was observed in the third quarter of 2013, at 3,997 million GDP. This and the fourth quarter of 2013 were the highest volumes. Valleys depicting a decline in volumes can be clearly seen between the intersections 2014-Q1 (£589 million), 2016-Q1 (£527 million), 2017-Q3 (£482 million) and 2018-Q2 (£363 million). The lowest points between these peaks are £249 million, £242 million and £270 million respectively. This progressive pattern is moving towards an overall decrease. Hence, it doesn’t come as a surprise that the last quarter of 2018 was the lowest with just £189 million in new orders.

 Notes***The volumes used in these statistics are seasonally adjusted by sector as prepared by ONS (Constant prices).

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