Sweden: Annual Development of Construction Cost Index Decreases to 8.5% in July

The latest statistical news from Statistics Sweden (SCB) reveals that the Construction Cost Index for multi-dwelling houses experienced a 0.4% increase in July 2023 compared to June 2023 (which saw a decrease of 0.1% in June). In comparison to July 2022, the Construction Cost Index rose by 8.5% (compared to 9.6% in June).

Key Highlights:

  • Electricity costs decreased by 4.2% compared to April 2023.
  • Diesel oil costs dropped by 17.6% between July 2022 and July 2023.
  • Interest costs surged by 82.2% from July 2022 to July 2023.
  • Continued decline in yearly changes for reinforcement steel and timber products.

The Construction Cost Index for multi-dwelling houses, excluding wage drift and VAT, is based on 2015 = 100. The index values and percentage changes for July 2023 and the periods from June 2023 to July 2023 and from July 2022 to July 2023 are as follows:

  • Entrepreneur’s Costs (82%): Index 139.8, Change 0.0%, Change 2.9%.
  • Client’s Costs (18%): Index 188.7, Change 1.9%, Change 33.4%.
  • Total Construction Cost Index (100%): Index 148.5, Change 0.4%, Change 8.5%.

Recent Monthly Development:

The Construction Cost Index for multi-dwelling houses increased by 0.4% between June and July 2023. This rise was primarily due to a 1.9% increase in client’s costs. Entrepreneur’s costs remained unchanged during this period. These two groups constitute 18% and 82% of the Construction Cost Index, respectively.

Client’s costs encompass interest and credit costs, as well as costs for design and central administration. The increase in client’s costs was largely attributed to an uptick of 3.5% in interest costs. Other costs either slightly increased or remained steady.

The entrepreneur’s costs for transportation, fuel, and electricity collectively decreased by 0.4%. This was driven by a 4.2% reduction in electricity costs (compared to April 2023). Additional costs rose by 0.4%, while labor and machinery costs remained unchanged.

On the whole, the entrepreneur’s construction material costs remained stable. While most costs increased slightly, the costs for reinforcement steel, concrete products, timber, and flooring materials decreased. Among these, appliance costs increased the most by 1.8%, while the costs for reinforcement steel saw the most significant decline, dropping by 2.1%.

Yearly Trend:

The Construction Cost Index for multi-dwelling houses rose by 8.5% between July 2022 and July 2023. The annual rate increased throughout 2022 and up until February 2023 but decreased afterward.

The entrepreneur’s costs increased by 2.9%, contributing 2.3 percentage points to the total increase in the Construction Cost Index. Client’s costs surged by 33.4%, adding 6.2 percentage points to the index. The rise in client’s costs was primarily driven by an 82.2% increase in interest costs.

The entrepreneur’s costs for machinery and additional costs increased by 16.5% and 5.3%, respectively. Meanwhile, labor costs rose by 4.4% between July 2022 and July 2023. Costs for transportation, fuel, and electricity collectively decreased by 3.8%, with diesel oil and electricity costs within this group dropping by 17.6% and 9.8%, respectively.

Among the entrepreneur’s costs, construction material costs increased by 0.9% between July 2022 and July 2023. All material costs increased except for costs related to reinforcement steel and timber, which decreased by 23.3% and 19.8%, respectively. The costs for iron and steel, including reinforcement steel, decreased by 13.1%. The largest increase in costs was observed in plumbing and heating materials, with an 11.3% rise.