Transitions in construction

Transitions in construction

Whatever you thought, think again.


This will not stand

IndustryPosted by Dan Engström Tue, November 01, 2011 10:39:20
I claim in the introduction above that the construction industry has not been so dedicated to change for as long as I have worked in it. I then started going on about it, using all the usual buzz words. Systems building. Cost drivers. Modularization. Building manufacturing. Partnering. Wonder why? Why that dedication? Here's the reason.
Based on information that anyone can download from Statistics Sweden, this little graph compares retailer price index (dotted line) with building price index (blue line) for multistorey residential houses, in Sweden, from 1968 to 2009. You will note the sharp increase in building costs in latter years, compared to the price of say a Mars bar. The decline in building costs during the 1990s was due to a combination of a local recession in Sweden and a restructuring of financing in the housing sector. The government decided to change from supporting housing to taxing it. And yes, there have been changes in the building code that makes houses more expensive to build but also less costly to heat, so we are comparing apples and pears. The general indication of investments compared to wages is clear though, despite those reservations.

I think your assessment of this graph will be the same as mine, and the same as the whole industry's. If the price of a Mars bar (as given by the RPI) is at all related to how much money you and I make, this simple graph tells us that people sooner or later will not be able to afford living in the houses we build. We will have to stop building residential housing or change our ways.

This will not stand.