Building costs continue to go up, as our index of percentage rises in building and tender costs shows. Labour shortages are pushing up costs as construction firms have to entice workers with pay increases or plug the staff shortages by bringing in workers from abroad. The move to off-site manufacture has also increased costs although these changes are not reflected in the index, which shows price differentials between years rather than one-off price rises.
Joe Martin, executive director of the Building Information Costs Service, which provided the index, says: "At the moment, non-traditional construction is more expensive to build so the drift towards [it] may push up the cost of building houses."
House prices and interest rates
House price inflation dropped markedly in 2003 and is expected to continue slowing next year. Prices are expected to rise 6% in 2004 – that's a sharp contrast with the massive 25.2% increase seen in the 2002 property boom.
The most significant development last year was a price surge in the north of England. The Royal Institution of Chartered Surveyors predicts that prices will hold firm across the UK in 2004 because of limited housing stocks and strong predicted economic growth, but interest rate rises will keep a lid on price inflation. However, a crash is not expected.
Source
Housing Today
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