In the past year in the US alone residential construction
costs have risen by around 6.3% whilst material costs have
risen by 7.6%. Even during the last month residential
construction costs have risen by another 0.3% and 0.6% on
material costs. So this in turn has meant that house prices
have also increased.
certainly the construction costs will play a very major role
in whether a residential development will either make or
lose money. Unfortunately the problem is that many
contractors are saying that they do not actually have huge
profit margins when it actually comes to the costs that they
pay for constructing the developments to what they actually
sell the residential properties for. Normally any profits to
be made are those of the developer of the site.
Certainly as there has been an increase in the price that
constructors are being made to pay for the steel materials
as well as a shortage of concrete has meant that the
construction of any development whether it is residential or
commercial has also become expensive. Unfortunately at the
end of the day these additional costs will be absorbed by
those that are actually purchasing the property that is
being constructed.
But many experts now believe that during the next year
construction costs will begin to lower as the costs of
materials that are required also become much lower.
Generally when looking to see how much residential
construction costs are going to be a developer will send out
a tender to various contractors of their choice. They in
turn will submit a bid which shows a precise costing out of
all the materials, labor etc., which will be needed in order
to construct the residential development. In most cases the
costs that these contractors provide will be an estimate of
what they actually think the materials etc., are going to
cost at the time of the construction commencing. In all
cases of a bid being placed for the construction of a
residential development the contractor will include a
contingency sum to cover any unforeseen or untoward expenses
or costs that they may incur during the actual time the
project is being carried out. Generally such a contingency
sum will be between 10 and 20% of the estimated total that
they have placed in their bid.
