Due to the increases on raw materias world wide you have to add 20% to the price below to obtain an average cost/m2 of construction
I have been asked this question pretty often and apart from answering (discourteously, I must say) with another question such as how long is a piece of string? This week we will try to provide a reasonable accurate answer to this question by analysing the cost of construction of a typical house.
The reason I decided to write this week’s article on this subject is because it has come to my attention the report published by the world wide consultancy EC Harris.
According to them, to construct a building from design stage to the finished building, including site acquisition, materials and labour, is in Spain 40% cheaper than in most EC countries, as recently released by the property consultancy EC Harris.
The study, conducted on a total of 29 countries and on five continents, shows that the price of construction in Spain is 18% cheaper than in France, 29% cheaper than in Holland and Italy and up to 71% below the average price of Ireland, surprise surprice...
For these experts, these data support the fact that higher housing prices are due to rising land prices and not to the increase of the remaining construction costs.
This report also reveals that only the countries of Eastern Europe presents construction costs lower than in Spain which.
For the rest of the world, Indonesia, Philippines and the United Arab Emirates are the countries with the lowest construction costs. In the other extreme we find Japan, Australia and the United States and particularly Denmark, where to build a house is more than twice as expensive as in Spain.
Economic growth in Western Europe has been slow and the Eurozone is expected to grow by 1.9% this year with a further 1.7% in 2012. The slow recovery from recession has hit the construction sector and construction price movements have generally been restrained. Construction prices in France, Germany and Italy have remained virtually unchanged over the past year and remain 13%, 7% and 1% respectively above the level of pricing in the UK.
In Eastern Europe, there are more signs of recovery with growth in the new EU member countries expected to be 3.0% this year followed by a further 3.6% increase in 2012 while the economies of both Poland and Russia are expected to grow by 4 and 4.5% this year and next. Construction price in Russia rose by 9% over the past year, according to the EC Harris figures, while prices in Poland are approx 30% cheaper than the UK and fell by around 5% over the year. The fall in prices in Poland comes despite the ongoing preparation for the Euro 2012 Football Championship and substantial investment of EU structural funds in major infrastructure works.
Once we have seen how world construction market prices are fluctuating around the world perhaps we can take a look at a break down in costs related to building a house in Spain.
Normally there are a number of factors that govern local prices and these factors are:
- Type of construction. Is it an individual house, an apartment? etc
- General Market situation. Is it a buoyant, market in recession? etc. (Any doubts?)
- Access to site. Is it complicated, difficult, easy?
- Site topography. Is it on an abrupt slope, on a horizontal plane?
- Exact location of the site. There are price variations even within an Autonomous Community or even a province.
- House shape. If we take a single storey house with a floor area of 100m2 and the floor plan is 10m by 10m, the total length of façade is 40m. The same area of 100m2 on a building with a façade of 5m by 20m, the area still 100m2 but the length of façades is 50m, we have 10m more of façade for the same building area.
- Total amount of garden left over after building our house. Normally we have to fence it off, do same planting or hard landscaping etc.
- Number and size of bathrooms. The bathrooms together with the kitchens are normally the most expensive rooms in the house.
- Finishes. Obviously the quality of the finishes will have an impact on the final cost of the house.
- The selection of the type of foundations, if concrete pads, deep trench, etc.
- What type of soil we will have to do the excavation? It isn’t the same to excavate on rock than to excavate on soft sand.
- Type of structure. Is it reinforced concrete frame, load bearing walls, timber frame? Etc.
- Installation services. We will have air conditioning, central heating, solar thermal panels?
- Type of façade construction. Is it a cavity brick wall with thermal insulation, do our windows have double glazing?
- Type of external walls. Are our external windows and doors made of aluminium or are they timber joinery?
- Type of roof. Are our roofs double pitched, with tiles or is it a flat roof with access to a solarium?
- Finishes. Are our floors and walls covered with tiles or we have an expensive marble?
With these elements decided on, we are able to provide an estimate of the total cost of construction and this cost should be pretty accurately within the standard local market price and that is what we will show on next week article.
Let me say however that the prices made available here will varied depending on the need and personal circumstances of the suppliers and contractor employed, so please view these prices as a guide only and not as an exact bill of quantities.
I have to say however, that I have performed a complete measurement of all items required to build a typical house as described below, so although it is intended to be used as a guide the work has been done professionally and accurately.
Let us first imagine a particular type of house so that the theoretical house can be measured and quantified. Let us first give answers to the questions presented on last week article.
So, we are dealing here with a typical Spanish country home construction, built to comply with all legal regulations, especially with those dealing with energy savings. This hypothetical house is erected on one floor with 160 m2 of construction within a building plot of 300m2 in size, with all services connected to the plot. Electricity, water, gas and sewerage.
To be more exact, below we have provided a description of the different aspects taken into account to produce the costs. As I mentioned before, a complete bill of quantities have been produced for this article, together with all the costs involved in the construction of this house.
Please let me know if any reader has any queries on any aspect of the prices or if any reader needs a more accurate breakdown of costs.
- Type of construction: Let us suppose that we have an individual house and not an apartment etc.
- General Market situation: In recession.
- Access to site: Easy.
- Site topography: Almost on a horizontal plane.
- Exact location of site: Jacarilla: (Alicante)
- House shape: Rectangular shape, bungalow type.
- Number of bedrooms and bathrooms: Two bedrooms, one bathroom and one guest’s W.C.
- Finishes: To choose from high quality, average and basic finishes we have opted for average finishes.
- Type of soil for foundation excavation: Let us say, compacted sand.
- Type of structure: Reinforced concrete frame with concrete slabs.
- Installation services: Let us installed all central heating pipes but no main boiler or radiators, this is normally done in Spain as most pipes are recessed in the walls but we do not want to spend money on boilers or radiators at this stage but we may do it in the near future without having to spoil wall finishes. We do have however up to 70% of all our sanitary hot water heating from thermal solar panels, needed by law now days. No gas installation, we will use the old butane gas bottle.
- Type of façade construction: Cavity brick wall with thermal insulation, double glazed aluminum windows and our walls are rendered outside and plastered internally.
- Type of roofs: Let us say we have a mixed roof with a portion with double pitched roof finished off with round Roman tiles and another portion of flat roof to be used as a solarium.
- Finishes: Floors and bathrooms and kitchen walls are covered with ceramic tiles.
With these elements decided on, we are able to provide an estimate of the total cost of construction and this cost should be pretty accurately within the standard local market price.
Let us see the prices divided in main sections.
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| Cost per square meter of construction = 241.325€/ 160m2 = 1.508€/m2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Write a comment
Tonia Steciuk (Wednesday, 26 August 2020 17:08)
Thank you for this, it's really useful. Is VAT payable on new build construction works and purchase of materials? If so, at what rate?
Juan Pacheco (Monday, 31 August 2020 13:03)
Hi Tonia,
The VAT on new build is 10% an on material 21%.
Juan Pacheco
Conor O'Donoghue (Monday, 09 May 2022 21:28)
I have a couple of questions, I hope you don't mind.
1. Were the costs of materials built into those prices?
(If so, it seems that there is not enough information to calculate the VAT. )
2. When you say there is 10% vat on a new build, is the 10% VAT already paid on materials not charged twice?
3. Are architect and engineer fees separate and additional?
Juan Pacheco (Wednesday, 11 May 2022 18:57)
Hi Conor,
I have a couple of questions, I hope you don't mind.
1. Were the costs of materials built into those prices?
(If so, it seems that there is not enough information to calculate the VAT. )
Yes it include materials and labour. The VAT is paid on the total cost.
2. When you say there is 10% vat on a new build, is the 10% VAT already paid on materials not charged twice?
No. See above.
3. Are architect and engineer fees separate and additional?
Yes. these are only construction costs.