immo!nvest – Die Plattform für Standorte und Immobilien

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  • Flattening of construction price inflation continues

    Flattening of construction price inflation continues

    In 2022, construction prices in building construction experienced a sharp increase of over 8 per cent. In contrast, the construction price index for April 2024 shows a moderate increase of 0.8 per cent compared to the previous year. Since the last publication in December 2023, prices in building construction have risen by 0.4 per cent. Despite this slowdown, construction prices remain stable at a high level. Compared to three years ago, building construction prices increased by 13 per cent in April 2024.

    Material prices as the driving force
    A key factor in the levelling off of construction prices is the development of material costs. The KBOB material price index for building construction shows that material prices fell by 2.2 per cent between May 2023 and May 2024. Most of this decline took place between May and October 2023. Since November 2023, the material price index has stabilised and fell only slightly by 0.4 percent. Prices fell particularly sharply for reinforcing steel, which was over 10 per cent cheaper in May 2024 than in the previous year.

    Energy and fuel prices as a counterbalance
    While falling material prices are contributing to a slowdown in the development of construction prices, rising energy and fuel prices are counteracting this trend. According to the national consumer price index, energy and fuel prices in May 2024 were 6.6 per cent higher than in the previous year, which is putting upward pressure on construction prices.

    Outlook for future developments
    Despite the current stabilisation, there are factors that point to a possible renewed increase in construction prices. Wage trends and the continued rise in energy costs could lead to an increase in construction prices of around 1 per cent in 2024. It remains to be seen how these factors will affect the construction price index in the long term.

    Conclusion: diverse influences on construction prices
    The current development of construction prices is influenced by various factors. While falling material prices suggest a stagnating or declining trend, higher energy and fuel prices as well as wage trends are putting upward pressure. Construction prices are currently stabilising at a high level and a moderate increase is expected for 2024.

  • Analysis and outlook for construction prices

    Analysis and outlook for construction prices

    The Construction Price Index 2023 reveals a complex dynamic in Swiss building construction, with moderate price increases influenced by a mix of international market conditions, currency effects and local economic factors. The industry faces challenges, including a changing labour market and declining construction activity, which require strategic adjustments. The report provides key insights for property industry management professionals to make informed decisions and anticipate future developments.

    The analysis of material prices for building construction shows a differentiated development: while the KBOB material price index only recorded a slight increase of 0.6 per cent in November 2023 compared to the previous year, a look at individual materials reveals significant differences. For example, prices for reinforcing steel fell sharply by 28 per cent, while fresh concrete and bricks saw price increases of 9.5 and 36 per cent respectively. These price developments reflect a normalisation of international market prices and the effects of the appreciation of the Swiss franc, which reduced import costs for building materials. However, this was offset by rising energy and fuel prices, which affected the cost of materials.

    The situation on the labour market in the construction industry and wage trends remain of strategic importance. Following a temporary increase in job vacancies in spring, the rate stabilised at 2.1% in the third quarter of 2023 and thus remains above the ten-year average. Demographic trends are intensifying the challenges facing the construction industry, which is contributing to continued upward pressure on wages.

    Construction activity, particularly in the area of residential and office space, has declined continuously since 2021. Investment in new building permits has fallen compared to the average values of the last five years, which is due to high financing costs and a subdued economic outlook. These developments could lead to increased price competition and impact profitability in the construction sector.

  • Building is getting more expensive

    Building is getting more expensive

    The construction price index rose by 2.7 percent between April and October of the current year. The price level in the construction industry has increased by 4.1 percent within a year. This is shown by figures from the Federal Statistical Office . As a media release shows, the additional costs in building construction and civil engineering are causing prices in the construction industry to rise compared to the previous half-year.

    Property developers have to dig deeper into their pockets for the shell construction, from earthworks to windows and doors, in all major regions. The most noticeable increases in building construction costs are in the Swiss Plateau with 3.4 percent and in Central Switzerland with 3.2 percent price increases.

    With the exception of Eastern Switzerland and Ticino, construction prices in civil engineering rose. In this sub-area of the construction industry, too, the regions Mittelland with 2.2 percent and Central Switzerland with 3.4 percent are most affected by the rising cost level. The price increases had the most pronounced effects on "smaller track construction" and somewhat less markedly on "fees".