Scottish housing tender prices rising

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Tender prices for social housing in Scotland have begun to rise since the beginning of 2017 following a year of minute change

Provisional results for the Scottish Social Housing Tender Price Index (SSHTPI) for the 2nd quarter of 2017 indicate that tender prices for social housing schemes are up 2% from the previous quarter and 3.5% from the same quarter a year earlier, with a 3.5% rise occurring in the first two quarters of the year.

Demand and resource cost

Tender prices are driven as much by demand as by resource costs; the movement in the SSHTPI has reflected the general trend in construction work in Scotland but they have started to diverge in the past few quarters with prices rising while output has fallen.

However, output in the Scottish housing sector in 2nd quarter 2017 has recovered from the decline in 1st quarter 2017 and is at the same level as 2nd quarter 2017.

BCIS prepares the index for More Homes Scotland, who publish a quarterly report on the SSHTPI. The report and details of the calculation of the index are available on the Scottish Government website.

The SSHTPI is based on comparing the prices for the construction of houses in current schemes with cost models of dwellings of different types (terraced, semi-detached and detached houses and flats in different block configurations), occupancy (numbers of bedrooms and occupants) and size (floor area).

These are adjusted for specification and design differences to provide a project tender price index. The project indices are adjusted for location and size of project. The quarterly index is calculated by averaging the adjusted project indices in each quarter. The index is smoothed to take account of the variation in the sample sizes.

BCIS prepares bespoke indices and forecasts for a number of clients. For further details, see RICS Data Services.

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