Rebuilding costs up 8% pa?

Question

Just had my buildings insurance renewal through, and have found that they the index-linked rebuilding cost has been increased by 8%. That sounded to me like a piss-take, but I went for a shufti over at

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and indeed, that seems to be the correct figure at the moment.

Why? General inflation is down at low single figures, and house prices certainly haven't increased this year (although I know that doesn't relate directly to rebuild costs). Just wondered why the figure is apparently so out of step?

David

Fred · Accepted Answer

Have a look why inflation is so low. It's mainly from cheaper imports of commodity goods which have generally been deflationary. Services and manpower has gone up disproportionately to give a net inflation figure of nominally 2%.

Peter Crosland · Answer

The index reflects the market price for building work. That reflects the degree of demand for building work. This often varies wildly from housing market demand and pricing.Peter Crosland

david lang · Answer

Services & manpower are dropping in the building trade due to cheap labour from the Balkans & similar areas. The hire of breakers & mini diggers is declining slightly because it's cheaper to pay £25 a day cash in hand and get it done manually.

Dave

John Laird · Answer

I noticed after the housing crash (when builders were apparently going bust left right and centre), that rebuilding costs forged on up regardless. My best guess is that rebuilding is a "distress purchase". As such, usual laws of supply and demand tend to go to the wall.

Rebuilding costs up 8% pa?

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