26 Sep 2005

Building materials cost update

I spent a couple of hours on Friday pouring over the recent invoices of my one-time partner Robin Gomm, who still runs the business, Complete Fabrications, that we started together in 1986. Cement prices up a little, block prices up a little, insulation prices up a lot, timber prices stable; no great surprises anywhere.

As I was leaving, Robin dipped into a filing cabinet and took out a pricing document that we used twenty years ago. It was handwritten, a document prepared in a pre-computer age, which made it seem somehow even more ancient than it actually was. It was fascinating to look at what had happened to costs over that timescale. You would instinctively feel that prices must have doubled, trebled or even quadrupled but what stood out were some items, notably plasterboard and timber products, which are actually cheaper today than they were in 1985. 12.5mm sheets of plasterboard were costing us over £4.00 a sheet back then: now Robin is paying £3.80.

Cement also made an interesting contrast. This most basic of building materials was costing £2.80 a bag back in 1985; currently the going rate seems to be £2.77. So is cement another example of inflation-free building costs? Unfortunately not. In the 1980s a bag of cement weighed 50kg. Now health and safety legislation prohibits the sale of bagged materials weighing more than 25kg so effectively cement has doubled in price as £2.77 buys you just 25kg. That’s equivalent to a 4% rise per annum and, coincidentally, equates exactly to the rise in the Retail Prices Index over that time period.

But cement stands out as one of the few building products that have actually kept place with inflation. My, admittedly subjective, reckoning has it that building materials as an amorphous grouping, have risen in price somewhere between zero and RPI. That is a trend which is likely to continue, higher energy costs notwithstanding. The main drivers behind increasing build costs are labour costs, which have risen more or less in line with house prices (i.e. far higher than RPI) and legislation, which requires us to put rather more into our houses today than we did in 1985.

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