New Build Costs and Material Costs
Discussion
Where do you guys see House and Flat new build costs going?
I know what the press is saying in as far as the building industry is on its knees etc etc etc but what kind of percentage do you think the cost per sq ft will drop?
Also how much of a margin is there in materials?
Not looking to start a thread about greedy developers and speculators or about the state of the UK housing market, just interested to see what you feel is or will happen.
Thanks
Shan
I know what the press is saying in as far as the building industry is on its knees etc etc etc but what kind of percentage do you think the cost per sq ft will drop?
Also how much of a margin is there in materials?
Not looking to start a thread about greedy developers and speculators or about the state of the UK housing market, just interested to see what you feel is or will happen.
Thanks
Shan
If I understand correctly, you're asking about the cost to the builder per square foot, not the price to the purchaser?
The former (and materials costs) have now dropped almost as much as they can to take account of current market conditions. Labour costs may have a little further to drop, but other than that it's down to the cost of raw materials and production costs, which are both largely dependent on oil prices. We went through a phase where, despite rapid contraction of the building market, the price of some energy-intensive building products (eg. bricks) was actually rising because the manufacturers had to pass on their increased energy costs.
That phase is now over, but the bottom line is that profit margins are now as low as components manufacturers can stand, so any future fluctuations in price will be directly related to labour and energy costs. If I could predict the latter, I wouldn't be on here, telling you.
Actual price to the purchaser has some way still to fall, but that's a different matter. If build costs don't fall further, then the difference will be absorbed by the housebuilders (in the short term) and the land prices (in the long term).
Ulitmately, reduced land value will throttle land supply, which is when the laws of supply and demand will kick in and prices will gradually start to rise, again...
The former (and materials costs) have now dropped almost as much as they can to take account of current market conditions. Labour costs may have a little further to drop, but other than that it's down to the cost of raw materials and production costs, which are both largely dependent on oil prices. We went through a phase where, despite rapid contraction of the building market, the price of some energy-intensive building products (eg. bricks) was actually rising because the manufacturers had to pass on their increased energy costs.
That phase is now over, but the bottom line is that profit margins are now as low as components manufacturers can stand, so any future fluctuations in price will be directly related to labour and energy costs. If I could predict the latter, I wouldn't be on here, telling you.
Actual price to the purchaser has some way still to fall, but that's a different matter. If build costs don't fall further, then the difference will be absorbed by the housebuilders (in the short term) and the land prices (in the long term).
Ulitmately, reduced land value will throttle land supply, which is when the laws of supply and demand will kick in and prices will gradually start to rise, again...
Thanks Sam
Yes its the costs to the builder and the cost per square foot to build i am more interested in not the final retail or sell on price.
Interesting re the cost of raw materials? Do you think they have been at cost price for a while then?
I saw an article on a brick manufacturer storing millions of bricks they are unable to sell on?
Cheers for the input
Shan
Yes its the costs to the builder and the cost per square foot to build i am more interested in not the final retail or sell on price.
Interesting re the cost of raw materials? Do you think they have been at cost price for a while then?
I saw an article on a brick manufacturer storing millions of bricks they are unable to sell on?
Cheers for the input
Shan
2 5HAN said:
Interesting re the cost of raw materials? Do you think they have been at cost price for a while then?
Yes, effectively. Or at margins so low that no sensible company would consider reducing them further. The suppliers responded very quickly when the downturn came (they had to - we forced them); with the exception of labour costs, there's not much left to squeeze that's within their control.Sam_68 said:
If I understand correctly, you're asking about the cost to the builder per square foot, not the price to the purchaser?
The former (and materials costs) have now dropped almost as much as they can to take account of current market conditions. Labour costs may have a little further to drop, but other than that it's down to the cost of raw materials and production costs, which are both largely dependent on oil prices. We went through a phase where, despite rapid contraction of the building market, the price of some energy-intensive building products (eg. bricks) was actually rising because the manufacturers had to pass on their increased energy costs.
That phase is now over, but the bottom line is that profit margins are now as low as components manufacturers can stand, so any future fluctuations in price will be directly related to labour and energy costs. If I could predict the latter, I wouldn't be on here, telling you.
Actual price to the purchaser has some way still to fall, but that's a different matter. If build costs don't fall further, then the difference will be absorbed by the housebuilders (in the short term) and the land prices (in the long term).
Ulitmately, reduced land value will throttle land supply, which is when the laws of supply and demand will kick in and prices will gradually start to rise, again...
Good summation from Sam. Materials are pretty much at rock bottom now.The former (and materials costs) have now dropped almost as much as they can to take account of current market conditions. Labour costs may have a little further to drop, but other than that it's down to the cost of raw materials and production costs, which are both largely dependent on oil prices. We went through a phase where, despite rapid contraction of the building market, the price of some energy-intensive building products (eg. bricks) was actually rising because the manufacturers had to pass on their increased energy costs.
That phase is now over, but the bottom line is that profit margins are now as low as components manufacturers can stand, so any future fluctuations in price will be directly related to labour and energy costs. If I could predict the latter, I wouldn't be on here, telling you.
Actual price to the purchaser has some way still to fall, but that's a different matter. If build costs don't fall further, then the difference will be absorbed by the housebuilders (in the short term) and the land prices (in the long term).
Ulitmately, reduced land value will throttle land supply, which is when the laws of supply and demand will kick in and prices will gradually start to rise, again...
I work for a medium sized contractor and I know we've lost tenders to competitors going in at 0% margin (and contracting margins are VERY slim as it is) so you just know that those contractors will be chasing every claim for variations, disruption etc.
Interesting Post.....
I am about to start a new build, finally got planning permission from the council just before Christmas and will be going out to tender in January so am very keen to understand the situation on costs.
The house we are building will be ours for the next 20 years plus so am not to worried about it's final valuation at completion, but do want to make sure we get value for money with quality at build, therefore understanding the situation with regards to materials and labour costs is key to our decision making.
The house is 180 Sq/m and when we started this process (over 2 years ago to get planning permission) the original rough guide from the architect and books we read was that £1000 per Sq/m was the figure to go with, is that still the case?
I am about to start a new build, finally got planning permission from the council just before Christmas and will be going out to tender in January so am very keen to understand the situation on costs.
The house we are building will be ours for the next 20 years plus so am not to worried about it's final valuation at completion, but do want to make sure we get value for money with quality at build, therefore understanding the situation with regards to materials and labour costs is key to our decision making.
The house is 180 Sq/m and when we started this process (over 2 years ago to get planning permission) the original rough guide from the architect and books we read was that £1000 per Sq/m was the figure to go with, is that still the case?
Cost per square metre was always a bit of a vague measure; it's too dependent on specification etc.
My comments above related to current conditions for professional developers. You'll find that as a self-builder:
a) You're seen as a soft touch.
b) Realistically, you don't weild much clout, because you can't hold out the promise of future volume business.
It will depend to a great extent on how you are managing the project. If you are putting out a contract to a builder, who will obtain the materials for you, then you have less control over negotiating costs.
If you are managing the build yourself (ie. buying in labour only), then you have scope for acheiving quite competitive rates for both labour and materials, if you are ruthless enough, but there will be a lot more effort involved.
You shouldn't have too much difficulty keeping it below £1000/sq. m., unless you go silly on specification, but don't expect to compete with the big boys - if I told you what our current build costs are per square metre, you'd be really depressed!
My comments above related to current conditions for professional developers. You'll find that as a self-builder:
a) You're seen as a soft touch.
b) Realistically, you don't weild much clout, because you can't hold out the promise of future volume business.
It will depend to a great extent on how you are managing the project. If you are putting out a contract to a builder, who will obtain the materials for you, then you have less control over negotiating costs.
If you are managing the build yourself (ie. buying in labour only), then you have scope for acheiving quite competitive rates for both labour and materials, if you are ruthless enough, but there will be a lot more effort involved.
You shouldn't have too much difficulty keeping it below £1000/sq. m., unless you go silly on specification, but don't expect to compete with the big boys - if I told you what our current build costs are per square metre, you'd be really depressed!
Thanks Sam68, I know from other sources that their build costs are more round the £350 - £425 mark, but they are on larger scale developments so appreciate mine would be more... but as long as I stick with the £1k area as a basis for judging my quotes then I should be ok.
And no we are not building anything amazing just a 4 bed town house with double garage (no gold taps) so am hoping not to incur extras as such.
And no we are not building anything amazing just a 4 bed town house with double garage (no gold taps) so am hoping not to incur extras as such.
Sam68 does speaketh the trust. You don't have any real negotiating power as a one off builder.
The money to be made is from splitting the build into packages & letting each individually, although obviously this will cause much more work for yourself in both management & coordination.
As for £/m2, I would expect 'joe public' to have to pay around this, even more maybe, simply as they do not have the contacts. As for 'professionals' working on £300/400 per m2, then again this is pie in the sky also. Somewhere inbetween, ie around £600/700 per m2 is nearer for a more basic build.
The money to be made is from splitting the build into packages & letting each individually, although obviously this will cause much more work for yourself in both management & coordination.
As for £/m2, I would expect 'joe public' to have to pay around this, even more maybe, simply as they do not have the contacts. As for 'professionals' working on £300/400 per m2, then again this is pie in the sky also. Somewhere inbetween, ie around £600/700 per m2 is nearer for a more basic build.
I am holding off letting packages at the moment for as long as possible, there are further reductions to come - mainly in finishing trades however.
At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
Mattt said:
I am holding off letting packages at the moment for as long as possible, there are further reductions to come - mainly in finishing trades however.
At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
This sums up my biggest gripe with the construction industry and the whole reason why I don't touch domestic or main contractors, never met a builder yet that doesn't think cheap cheap cheap and thinks that they can squeeze the finishing trades to make more margin and still expect a 1st class finish, in 99% of cases that is simply not correct, if the subbies are doing it super cheap then they are either small outfits working for wages with no regard to making a profit and or are cutting corners, either way it's not conducive to quality and you will lose out as a result.At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
The best advice I can offer is to choose the various trades by reputation and portfolio rather than cost, never go through a main contractor for these packages and appoint a bloody good Architect that will also manage it all for you, pay a bit more and get a lot more back
taffyracer said:
Mattt said:
I am holding off letting packages at the moment for as long as possible, there are further reductions to come - mainly in finishing trades however.
At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
This sums up my biggest gripe with the construction industry and the whole reason why I don't touch domestic or main contractors, never met a builder yet that doesn't think cheap cheap cheap and thinks that they can squeeze the finishing trades to make more margin and still expect a 1st class finish, in 99% of cases that is simply not correct, if the subbies are doing it super cheap then they are either small outfits working for wages with no regard to making a profit and or are cutting corners, either way it's not conducive to quality and you will lose out as a result.At the end of the day as a self builder, don't make a cheap appointment - it will cost you more in the longer term. Find someone who you can get along with, and seems to understand what you require.
Interestingly (and perhaps not very relevant to the first question), we are about to start a construction project, rebuilding of a (big) block built shed and a two storey extension and we had a call from a builder who we have worked with previously. He'd been speaking to someone who told him we were approaching a start point and he wondered if he might be able to tender.
Took us bleeding ages to track him down last time so I guess this reflects the current market?
Took us bleeding ages to track him down last time so I guess this reflects the current market?
That's my point, if you get a decent contractor that isn't under pressure to cut costs where he can and make up the extras you won't get those hassles and you'll get the quality of finish you require, any decent contractor will allow for most circumstances and give his best price and not slash it to buy turnover, times are tougher for sure and margins are tighter, but there are still many decent contractors that don't need to slash costs, those that do are likely to be the ones that will give you grief and trust me there are a load of s
t ones out there buying work right now
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