Building: ways to contain the rise in construction prices

Building professionals are putting forward a number of ideas to counter the rise in construction prices that has fuelled the rise in production costs in the construction industry.

Construction costs remain high

At the beginning of the year, INSEE published its indexes for building and civil engineering for the 4th quarter of 2022. It seems that the downward trend that began last summer continued towards the end of the year. The index for all building trades stood at 126.8 in December, compared with 127.9 in August. In public works, the index fell in December to 126.5, compared with 129.1 in the summer of 2022.

Construction prices stabilized thanks to " a slight fall in steel and petroleum product prices ", says Insee. However, the cost of materials and energy in the building industry remains high, fuelling inflation. Indeed, labor costs account for 40% of the building index.

The experts also point out that the overall stabilization of prices conceals significant disparities between different construction activities. For example, for glazing and millwork, the index stood at 148.8 in December, an increase of over 21 points in one year. PVC joinery and tiling reached new heights, with respective year-on-year rises of 12.1 and 11 points.

Forecasts for 2023 are not particularly optimistic. " We're expecting more of a plateau than a decline ," Yves Coltier, Insee's research manager, tells Les Echos newspaper.

How to bring construction prices down?

To curb the rise in construction prices and revitalize housing production, building and civil engineering professionals are not short of ideas.

Some professionals believe that construction needs to be rationalized. " Lower costs will come from repetition," says Vincent Legendre, Chairman of the Board of Groupe Legendre. Covivio, one of Europe's leading real estate players, makes the same observation, stressing the need for " projects that can be more easily duplicated ".

Another option being considered is the use of prefabrication or off-site manufacturing. Faster construction, reduced environmental risks, enhanced pre-construction quality control, reduced risk of on-site incidents... this technique offers numerous advantages.

Interviewed by Les Echos newspaper, Vincent Legendre nevertheless points out the limits of prefabrication in terms of architectural ambition, and suggests " taking inspiration from the automotive industry " by assembling " standard elements inside the building and a different shell ".

Last but not least, the use of local resources in construction is the subject of much debate. Some professionals consider that this would reduce transport costs, while others think that the supply chains are still too weak.

Professionals put forward a number of possible solutions to the housing crisis, but remain divided on which ones to favor.