BCIS reports steady growth in housebuilding cost inflation at end of 2025
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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%.
BCIS thanked the PHCPI survey respondents for their contribution.
If you are a housebuilder and would like to participate in the BCIS PHCPI quarterly survey, please email contactbcis@bcis.co.uk.
For more information about BCIS, please visit: www.bcis.co.uk
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Editors notes
About the PHCPI:
The BCIS Private Housing Construction Price Index is a measure of the prices paid by housebuilders for constructing houses/flats, i.e. changes in the costs of direct/subcontracted labour, plant and materials, overheads and profit attributed to the construction, but excluding the cost of land and other development costs and any development profit.
A range of small, medium and national housebuilders are surveyed each quarter to identify the change in prices paid for constructing a standard house type. Contributors are also asked to provide their expectations for price changes in the following quarter and the mean of these projections is published as a forecast for the current period.
About BCIS:
The Building Cost Information Service (BCIS) is the leading independent provider of construction data to the built environment and insurance sectors. For more than 60 years BCIS has been collecting, collating, analysing, modelling and interpreting cost information to support built environment professionals, helping them provide cost advice, to have confidence in commercial decision-making and to mitigate risk. BCIS was recognised at the Engineering Matters Awards 2024 with The Net Zero Champion Gold Award for its leading role in the development of the Built Environment Carbon Database. BCIS celebrates its 65th anniversary this year.
