1. Prague – 49.3%
Prague saw the largest increase in building prices between 2020 and August 2023 at 49.3%.
Looking at the results year on year, there was a particularly high increase across 2022 where costs jumped almost 21%. It’s a stark difference from the increases seen in 2020 – which was much lower at 2.3%.
The rapidly rising construction costs might relate to issues with shortages of labour. According to Reuters, who spoke with 14 company executives, recruiters, industry bodies, and economists in Poland and the Czech Republic last year, shortages of labour from Ukraine had caused rising costs and delays in manufacturing orders and construction work.1
Before the Russian invasion of Ukraine, Ukrainians were the largest group of foreign workers in central Europe. The Czech Republic and other European countries such as Poland hosted 600,000 workers from the country before the war. However, the rise in prices may also be due to the effects of the COVID-19 pandemic.
Additionally, as noted in a report by Acardis, the war in Ukraine had a huge disruption on supply chains for materials and energy for creating building materials, leading to a five to six per cent increase in inflation across European markets.2
2. Toronto – 40.5%
Toronto has seen the second highest construction price increase since 2020 at 40.5%.
When we extended the scope of our research to include the last five years of activity, we could see that prices in the city have been steadily increasing since 2018, too. Toronto saw the highest increases of any country in our index across both 2018 and 2019.
The climbing prices could be due to higher borrowing costs and labour shortages. According to the Canada Mortgage and Housing Corporation, 262,000 homes were built in 2022, but this is anticipated to drop to 212,000 in 2023.3 Construction issues in Toronto from 2020 to 2023 may also relate to how bidding works for construction projects. Toronto doesn’t allow open bidding to all constructors and only to a select few, meaning construction prices remain high.4
3. Singapore – 32.8%
Singapore ranked third on our list for having some of the highest increases in building price changes across the past few years. The Southeast Asian country saw price growth of 32.8% from early 2020 to August 2023.
In the year 2020 alone, Singapore had the second-highest increase of 6.4%, which was just behind Auckland’s 6.9%. The worst periods for the city were 2021 (9.1% increase) and 2022 (10.1% increase), however in each of these years, other cities still saw higher price hikes than Singapore.
According to Yahoo! Finance, Singapore’s construction costs average US$3,307 per sqm, ranking it as the fourth-most expensive city in Asia and 31st globally.5
While the Singaporean construction Industry has struggled to meet construction demands, there is some hope for Singaporean residents as market conditions are projected to improve this year, thanks to the price of materials such as metal being predicted to drop.6
1. Amsterdam – 0.6%
Amsterdam showed the smallest increase in construction costs across the period studied at 0.6%.
The city was one of very few that saw occasional decreases year-on-year in construction prices, specifically in 2021, recording a change of -3.2%. In the year following, prices jumped once more to record a 4.1% increase.
According to the Dutch bank ING, the construction market is likely to experience a slight growth of 0.5% in 2023. This is better than the overall Dutch economy, which contracted by 0.3% in the first quarter of this year.7 Meanwhile, roughly 30% of existing homes are selling for more than their asking price, compared to 80 percent a year ago in The Netherlands.8
2. Copenhagen – 13.3%
The Danish city of Copenhagen also saw limited construction price growth across the past couple of years, at 13.3%.
The construction market is expected to grow by 5% to €19,595 million this year.9 According to the German ifo Institute, fewer homes will be constructed in Europe in the future. Denmark is one country expecting to see a significant drop in completed homes – a decline as sharp as -33%.10
3. Birmingham – 13.5%
The English city saw the third smallest increase in construction prices from January 2020 to August 2023, with the average sitting at 13.5%.
The English city has consistently seen price growth over the past five years, with 2020 being the exception, where no change in prices was recorded.
A review which was done by economics consultant Mitchell McDermott showed that construction costs in Birmingham are from 21% to 29% lower than a similar type of house built in Dublin.11 The analysis of the cost modelling found the differing prices between Dublin and Birmingham are due to a combination of differences in local market conditions and labour costs in the UK.