Rise of the construction price index was driven by wage pressure and higher prices of materials

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Posted on 20 January 2020, 10:00
According to Statistics Estonia, in 2019, the construction price index increased by 1.9% compared to the average of 2018. In the 4th quarter of 2019, compared to the 3rd quarter, the construction price index changed by 0.5%, and compared to the 4th quarter of 2018, by 1.7%.

Rise of the construction price index was driven by wage pressure and higher prices of materials

In 2019, compared to the 2018 average, the cost of labour increased by 4.3%, use of machinery by 2.0% and building materials by 0.7%. In the 4th quarter of 2019, compared to the 3rd quarter, the index was mainly affected by an increase in the costs of materials, which accounted for 44% of the change. In the 4th quarter, the increase in labour costs accounted for half of the year-on-year rise of the index.

The repair and reconstruction work price index rose by 2.2% in 2019 compared to the average of 2018, including a 4.4% increase in the costs of labour, 5.3% increase in the use of machinery and 0.4% increase in the prices of materials. The index change in the 4th quarter of 2019 was 0.5% compared to the 3rd quarter, and 1.9% compared to the 4th quarter of 2018.

The calculation of the construction price index covers four groups of buildings: detached houses, blocks of flats, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in construction expenditures taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Change in the construction price index, 4th quarter 2019
  3rd quarter 2019 – 4th quarter 2019, % 4th quarter 2018 – 4th quarter 2019, %
TOTAL 0.5 1.7
labour force 0.8 3.2
building machines 1.5 1.5
building materials 0.3 1.0
Index of detached houses 0.6 2.1
Index of blocks of flats 0.5 1.7
Index of industrial buildings 0.2 1.5
Index of office buildings 0.6 1.8
Change in the repair and reconstruction work price index, 4th quarter 2019
  3rd quarter 2019 – 4th quarter 2019, % 4th quarter 2018 – 4th quarter 2019, %
TOTAL 0.5 1.9
labour force 0.6 2.9
building machines 2.0 3.4
building materials 0.2 1.1

For the statistical activity “Construction price index”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting this statistical activity.