top of page

So, how much does it cost to build my house?

  • Mar 9
  • 4 min read

Updated: Mar 11

Regional Influence

It's important to note that build costs vary significantly from one part of the country to another. Regional variation MUST be taken into consideration when trying to understand general costs of construction whether it be a residential build or otherwise. As you're likely here because we're a practice specialising in residential architecture, let's focus on that sector...


It's probably understandable that London carries one of the highest regional influences on cost. However, don't forget more remote areas like the Shetland Isles and other Islands of Scotland which will carry an even greater premium, mainly due to accessibility. Scotland generally though is cheaper than London. England, particularly the south of England closely follows London, followed by the Midlands, then up into the North of England, with the East typically lower than the West.



A Breakdown of Calculating Cost



Many of our projects are located in the South East of England and a 3-bedroom moderately sized property (excluding garage) in this region sits at around 100m2. For the purpose of providing a worked example, we'll use that as a basis.


As a base cost (with an economy of scale factor at 1 - this will make more sense when reading 'Economy of Scale Factoring' below), you should be looking at £2,700 per square metre for a new-build... but this isn't the only variation to consider... Let's take a closer look at why this isn't a true representation of a cost/m2 and why you'd need to adjust this to a number of parameters to arrive at something more accurate.



Economy of Scale Factoring

Just like the cost of anything, there is an economy of scale to building costs. This is of course assuming we're comparing like for like and the quality of finish and product remain the consistent.


The economy of scale in construction value isn't exactly linear. From the £1m mark onwards, a more predictable and more consistent saving is made, albeit at a lower progressive rate. Below £1m, the rate of scale can be quite steep. This means small builds can carry a particularly high price tag for the space they actually deliver compared to building something slightly larger.


This is why we quite often explain to clients how extending a property single-storey can be the most expensive way to add space to the home. Just think, if you were able to build a two-storey extension, whilst yes more robust foundations are required and of course more materials by its very nature are needed, the cost of that material reduces with larger orders, labour is already being delivered to site and other considerations like machinery, scaffolding etc. are already being implemented.


Working off indicative economy of scale factoring (Credit: Costmodelling Limited), the adjustment on the base value in our example of approx. £270,000 is around +7%.


As a comparison, a base cost of £500,000 could be just +3.5% whereas a build cost of £100,000 could carry an adjustment on scale equating to around +12% per fixed area.


Ok, so for 100m2, we're now at £288,000/m2, but what else?



Inflation

Now we need to consider both the inflation through the tender stage and inflation through the construction programme.


Various sources publish data on the UK Construction market, both for historic comparables and projected forecasts. Here's a some below, plus the links to access them (source: costmodelling.com):


Based on data available, approximations from this and for the purpose of this exercise we will assume some figures below:


Let's say the project went to tender now, it spent 3 months at tender, 3 months to mobilise and took 12 months to build. For this, you should expect the tender inflation rate to be approximately +0.9% and the construction period inflation rate to be approximately +1.6%


Now we're sitting at around £295,000/m2



Other factors?

An allowance should be made for external works, even if only basic. Let's allow +10% for this.


An allowance for contingency, say +12%


Finally an allowance for professional fees; +10%


This provides an overall rate per square metre at approx. £3,960


Is this on the high side? Perhaps


Could this be reduced? Absolutely!


This, as you've seen, is based on a number of factors but most of these are averages or forecasts. Consideration hasn't been made for the type of construction, the materials used, the finishes, or unpredictable things like an individual contractor's access to materials or labour.


There are so many factors which can affect the cost of your build. Hopefully now you can see why it's never a simple answer, and why cost is incredibly difficult to predict.



So what can I do to understand the cost of my project and who should I be speaking to?

We believe cost should be analysed and reviewed regularly. We have a good understanding on what a project may cost and we'll design in the early Concept and Planning stages to align your budget to these but on most projects, to ensure cost is assessed accurately and monitored regularly, we introduce a QS (Quantity Surveyor) as early as possible.


A QS around Stage 3 (planning) can provide Budget Cost Estimates. Eventually these will evolve into a Cost Plans, Bills of Quantities and even further into Tender Reviews.


Working with practices like Elements Architectural Studio who understand the general application of costs to various project types and scales, alongside employing a QS at an early stage who will help manage costs through a project is essential to a successful financial outcome.


So next time you want to know, how much a project costs... don't be surprised if you don't get a clear answer first time. It is actually a sign of good quality advice, that this is developed, based on an understanding of various factors, not instantaneous and plucked purely from thin air.


Credit: Costmodelling Limited, costmodelling.com

 
 
 

Comments

Intro.png
bottom of page