Rising construction costs are making government housing targets unrealistic according to global economic forecasting group Experian.
It predicts house construction costs will rise by 16% this year – almost seven times the rate of inflation – and 11.6% in 2005, with the upward trend continuing.
The Barker report identified the need for 70,000 new private and 21,000 new publicly owned homes a year, mainly in London and the south-east, but Experian said increasing rates for skilled labourers combined with rising costs of brownfield reclamation and planning constraints are making new build far less viable.
Inflation in publicly owned housing is less aggressive, having risen 7% this year and forecast to stabilise at 3-4% a year to 2008. However, increased building costs are seen as a serious barrier to completing new projects withi n budget.
