The Hidden Costs of Housing Construction

At the forefront of these costs is energy, a budget line that has impacted all sectors of the economy. Then, the increase in the price of construction materials has inevitably affected all professionals. As has the shortage of talent, which affects the construction and real estate market.

Energy price instability at the heart of concerns

France was the country most affected by the increase in energy prices for housing construction, with over 60% of respondents having been impacted, 5 points higher than the global average. Nearly 35% in France said they were "significantly impacted", compared to less than 18% worldwide. This increase in energy prices having reached +67% in France compared to 2021, according to INSEE[2].

Property managers, developers and general contractors represent the most affected population. Indeed, these professionals are on the front line and are directly affected by increases in energy prices, which weigh on their competitiveness and profitability.

Beyond energy, which concerns the entire population, respondents highlight costs inherent to the construction industry, namely materials.

The price of materials, a fundamental issue for housing construction

It is clear that the cost of materials represents a significant part of the housing construction budget. Respondents were asked about supply difficulties, delivery times, sourcing of eco-friendly materials, the quality of materials as well as their prices and availability.

While only 13,15% of respondents experience delays in delivery, more than 70% are experiencing an increase in the price of materials. This increase affects all professions in the sector and all geographical areas.

Regarding delivery times, they particularly affect property managers and property developers (21,05%), but concern less than 10% of specialist companies (electricity, plumbing, painting, carpentry, etc.), which have the advantage of benefiting from specific supply chains.

The eco-responsibility of materials is the subject of many questions, particularly in the context of calls for tender. Nevertheless, public stakeholders unanimously believe that this does not represent a constraint. Only a small proportion of architects consider themselves to be in difficulty with this subject (7,45%). But public decision-makers are faced with other issues concerning materials: their quality (14,29%), in the same rank as specialist companies (14,63%). For the vast majority of respondents, these quality (6,89%) and environmental (4.86%) aspects are therefore not a concern.

France is no exception to global trends and even seems to be more impacted by them. Indeed, more than 77% of French professionals are affected by price increases for materials (+7 percentage points compared to the global average) and 18% by delivery times (+5 percentage points compared to the global average).

No talent, no housing

The shortage of talent is recognized as the greatest difficulty by professionals in construction and real estate. More than 80% of them face a shortage of qualified personnel, which mainly results in an increase in human resources costs (salaries, etc.) in order to ensure talent retention and develop attractiveness.

This phenomenon is even more pronounced for specialized companies (92,86%) and for more than 88% of real estate managers and property developers. Architects are among the least impacted, but remain substantially so (71,28%).

Here again, France does not stand out with this structuring problem for the ecosystem, but it seems less pronounced. The impact of the talent shortage on finances in France is less "significant" (27,27%) than in Poland (53,57%), Spain (40,74%) or Romania (40,43%).

Although the costs associated with the talent shortage are palpable for all companies, they appear to be limited for the French market.

Despite all these more or less hidden costs for the real estate construction industry, according to respondents, there is a way to overcome them. Thus, more than 64% of them consider that it is necessary to increase technological investments in order to simplify and streamline the resolution of these problems. Whether for the optimization of energy consumption, materials management and talent, the use of a digital platform represents a complete solution to meet these challenges.

In this respect, respondents believe that investing in new technologies is the best solution, ahead of reducing regulatory barriers for housing construction, public aid or structuring a migration policy focused on jobs in short supply.

Illustrative image of the article via Depositphotos.com.