In December, new housing construction costs increased by 7%, according to estimates by the National Statistics Institute (INE). This increase is explained by the price of materials and the cost of labour, which rose by 8% and 5.1%, respectively. In the entire year of 2021, the average variation of the index was 5.7%, well above the 2.1% observed in 2020.

Despite the 6.8% increase in the New Housing Construction Cost Index verified in December, this value represented a decrease of 1.4 percentage points compared to November. In the last month of last year, materials were 8% (9.4% in November) more expensive and labour increased by 5.1% (6.8% in the previous month).

The INE states that the cost of materials was the one that most influenced the evolution of the index: it contributed with 4.6 percentage points, while the labour component contributed with 2.2 percentage points.

In annual terms, the New Housing Construction Cost Index increased by 5.7% in 2021, above the average variation of 2.1% in 2020, says the INE. Last year, the materials and labour indices recorded average annual increases of 6.2% and 5.1%, respectively.

The increase in construction costs is a problem that industrialists in the sector have been warning about in recent months. In addition, entrepreneurs also complain about the lack of manpower, with construction companies not being able to provide the necessary response to increasing demand.