Building a house again more expensive – increase of 25% on average in a few years
The soaring construction costs have already been heard for several years. After a clear slowdown at the beginning of the previous decade, the construction market has been growing rapidly for 4 years. The number of flats, single-family houses or office space under construction is breaking records year after year, and the prices of building materials and services are rising rapidly. Let us see how these market conditions translate into the cost of building a single-family house.
How much will you pay to build a house in 2020?
As every year, the Kalkulatory Budowlane (KB.pl) service has carried out an analysis of the costs of building the most popular houses to developer’s condition – 100 m2, 140 m2 and 195 m2 respectively. The results of the calculations were again an unpleasant surprise – the construction of the shell was 8-9.5% more expensive, while the cost of construction to the developer’s condition increased by about 8%. In practice, this translated into the following valuations:
Precise costing assumptions and detailed prices for each stage can be found in the article on building costs of the house 2020.
To the above costs you should add the cost of turnkey interior finishing – depending on the standard from 50 to even 200 thousand PLN.
25% more expensive in just 3 years
Taking into account the data from previous reports, the costs have increased by about 25% since January 2017. At the beginning of 2017, we could still pay a little over a quarter of a million zlotys for a 140 m2 house (again, developer status, net price). Today it is almost 70 thousand PLN more. Even the price of the smallest house – because it is only 100 meters high – has increased in this period by 54 000 PLN. The biggest house – over 74 thousand PLN – has increased by 195 m2.
While throughout 2017 prices grew relatively quietly – by 5-6%, in the last two years the annual increases were close to 10% (an average of 9.3% in 2018 and about 9% in 2019). Unfortunately, the increase in prices was not compensated for by a rapid increase in the average salary, as a result of which the average Pole has to work a little longer at home.
The number of houses under construction is increasing, but the average area is falling
Uninteresting conclusions can be drawn from the recently published report of GUS. According to a recently published report, the average area of a house built in Poland has fallen by 5 m2 over the last 6 years. This means that more and more Poles are compensating the rising costs with smaller usable space. As early as in 2013, the average area amounted to 148.5 m2, while last year, the average house being completed was only 143.5 m2.
Similar trends can be observed in residential construction. Only a dozen or so years ago, a standard 2-room apartment had an area exceeding 50 m2. Today, M-2 units of less than 40 m2 do not surprise anyone anymore, and in large cities 55 m2 is slowly becoming the standard for 3-room flats.
There is one more interesting piece of information from the CSO report – on average, the largest houses are being built in Warsaw (194 m2). This can be related to land prices – the average price of a square meter of land in Warsaw is several, and sometimes even several times higher than in smaller towns. That is why houses in Warsaw are built by much wealthier people, who have no problem to pay several hundred thousand zlotys more for additional living space also at the construction stage.
What will be the cost of building houses in the coming years?
In the coming years several factors may overlap with the costs of building a house. It seems that the dynamics of construction and assembly production is slowing down. According to preliminary data of the Central Statistical Office (GUS) of 21.01.2020, in December 2019 it was 3.3% lower than in December 2018. In the period from January to December 2019, the production increased by only 2.6%, while a year earlier the corresponding increase was as much as 17.9%. These data should soon translate into a slowdown in labour price increases.
On the other hand, since 2021 even stricter standards concerning thermal insulation of buildings and their energy demand have come into force. By 2017, the maximum primary energy factor for newly constructed buildings was 120 kWh/m2. At present it is 95 kWh, and from 2021 it will be only 70 kWh/m2. What does this mean in practice? Higher material costs. The investor will have to use better materials to insulate the building, invest in better quality windows as well as in the preferred source of heat. You will learn more about how to calculate this factor from this article.
To sum up, building a house in the following years will certainly be more expensive. It is hard to predict whether prices will increase by 3 or maybe 10% in 2020, but it will certainly be more expensive.