Annual housebuilding cost inflation, as measured by the BCIS Private Housing Construction Price Index (PHCPI), stood at 2.0% in 4Q2025, down from a peak of 15.3% in 2Q2022, and the same level as was seen in 3Q2025.
On a quarterly basis, this represented a 0.3% increase compared with 3Q2025.
Dr David Crosthwaite, chief economist at the Building Cost Information Service (BCIS), said: “Annual housebuilding cost inflation remains modest at 2%, with only limited movement on the quarter. Although output has weakened, new orders have strengthened and builders expect a 1% rise in costs in the first quarter of 2026, which would nudge annual growth slightly higher.
“The picture is therefore one of relative stability, but whether that translates into increased delivery will depend on wider market confidence as much as cost conditions.”
Of the BCIS PHCPI respondents reporting a change in costs in 4Q2025, 38% reported an increase in materials’ costs and a further 31% cited subcontractor cost increases as the main drivers. Labour cost increases were noted by 23% of respondents and 8% reported lower materials costs.
Looking to 1Q2026, the housebuilders surveyed said they expected to see an average increase in costs of 1% on the quarter, which would produce stronger annual growth than has been in seen in recent quarters of 2.3%.
