COMPARATIVE PRICE LEVELS FOR CONSTRUCTION
IN 33 EUROPEAN COUNTRIES FOR 2005 1

This article presents the main results of a survey on prices of construction in 2005 across 33 European countries. The survey is part of the Eurostat-OECD Purchasing Power Parities (PPP) program. The 33 countries that participated in the survey are the 27 Member States, the 3 candidate countries Croatia, the former Yugoslav Republic of Macedonia and Turkey and the 3 EFTA countries Iceland, Norway and Switzerland.
This construction survey, together with a survey on prices for investment goods, has as objective to produce PPPs and Price Level Indices (PLIs) for the above countries for Gross Fixed Capital Formation (GFCF). This aggregate is one of the main components of Gross Domestic Product (GDP). GFCF is made up of 3 expenditure categories: "Machinery and equipment", "Other products" and "Construction". Construction has a share of about 10 per cent of GDP in most of the EU Member States. The results of the investment goods survey are presented in a separate Statistics-in-Focus publication.

Figure 1: 2005 Price level indices for construction (EU27=100)

Price level indices provide a comparison of the countries' price levels with respect to the European Union average: if the price level index is higher than 100, the country concerned is relatively expensive compared to the EU average and vice versa (see also methodological notes).
Figure 1 above shows the 2005 Construction PLIs of the 33 countries that participate in the Comparison Programme. The Northern countries tend to have the highest PLIs, while the Eastern countries have the lowest, particularly the former Yugoslav Republic of Macedonia and Bulgaria whose PLIs are 31 and 32, respectively. Southern countries tend to have intermediate PLIs.
Countries participating in this survey priced three different types of construction projects: residential buildings, non-residential buildings and civil engineering works.
The residential building category contains one or two dwelling buildings and multi-dwelling buildings.
For non-residential buildings, countries priced agricultural buildings, industrial buildings, commercial buildings and other non-residential buildings.
The category civil engineering works is made up of transport infrastructures, pipelines, communications and power lines and other civil engineering works. The 2005 construction survey was carried out during the months of June and July 2005.
The price level indices for construction in 2005 fall into the country groups shown in figure 2.
Group I (>=120%): Denmark (DK), Ireland (IE), The Netherlands (NL), Sweden (SE), United Kingdom (UK), Switzerland (CH) and Norway (NO) (7)
Group II (>=80% and <120%): Belgium (BE), Germany (DE), Spain (ES), France (FR), Italy (IT), Luxembourg (LU), Austria (AT), Finland (FI) and Iceland (IS) (9)
Group III (>=60% and <80%): Estonia (EE), Greece (EL), Cyprus (CY), Lithuania (LT), Hungary (HU) and Portugal (PT) (6)
Group IV (>=40 and <60): Czech Republic (CZ), Latvia (LV), Malta (MT), Poland (PL), Slovenia ( SI), Slovakia (SK), Croatia (HR) and Turkey (TR) (8)
Group V (<40): Bulgaria (BG), Romania (RO) and the former Yugoslav Republic of Macedonia (MK1) (3)

Figure 2: Price level indices for construction 2005 (EU27=100)

The graph shows that the most expensive countries Sweden (163) and Switzerland (155) register construction price levels 5 times higher than the cheapest countries Bulgaria (32) and the former Yugoslav Republic of Macedonia (31).
Group 1, the most expensive, is mainly made up of Northern countries, while in group 5, the least expensive, we can find the 2 new Member States Romania and Bulgaria, together with the former Yugoslav Republic of Macedonia.
Group 2 contains countries whose construction price level is from 20 per cent under the EU27 average to 20 per cent over this rate. This group comprises mainly Central and Southern European countries, although Iceland and Finland, with PLIs of 113 and 107, respectively, also form part of it.
Groups 3 and 4 are mainly made up of the 10 countries that joined the EU in 2004, although Greece (72) and Portugal (62) form part of Group 3 and the candidate countries Croatia (59) and Turkey (57) are in group 4.
Box 1: Some characteristics of the 2005 construction survey
The objective of the construction survey is that countries collect prices for a list of "bills of quantities". Bills of quantities are fictitious projects that consist of a number of chapters or major components (like earthworks, concrete, masonry, etc.), which are made up of items or elementary components (like excavation of the terrain, dumping and compacting of spoil, etc.). The reason for using these bills of quantities in the construction survey is that it is very difficult to find the same actual project across countries.
The construction survey was carried out during the months of June and July. Countries collected prices for the 15 bills of quantities covered by the 2005 survey (see box 2).
Countries are asked to collect purchasers' prices for the bills of quantities, i.e., prices actually paid in the markets for the elementary components that make up those bills of quantities.
Price collection has been carried out by the National Statistical Institutes during the months of June and July 2005, often assisted by external experts on construction.
At the end of the price collection period, countries had priced in total 744 bills of quantities, taking into account their alternatives. These alternatives are necessary due to the fact that, since there is a close connection between the materials used and the construction methods adopted (that depend of the regions and their climate, etc.), variants for a number of elementary components (items) are included in the bills of quantities for improving their representativity.
The bills of quantities priced by the largest number of countries in 2005 were the office building (30), the sewer main (29) and the agricultural shed and the asphalt road (28, both of them). The bills of quantities least priced by countries were the Nordic house (11) and the concrete road and the factory building (each 14).

2005 PLIs for GFCF, total construction and its components

Table 1: Price level indices for GFCF, total construction
and its componenets 2005 , EU-27=100

Country GFCF Total construction Residential buildings Non-residential buildings Civil engineering works
Belgium 99 103 105 100 106
Bulgaria 52 32 29 31 46
Czech Republic 71 55 45 57 74
Denmark 125 142 162 127 123
Germany 104 114 116 116 89
Estonia 78 68 63 70 77
Ireland 128 140 152 133 100
Greece 84 72 66 75 86
Spain 96 93 89 89 117
France 109 111 113 112 102
Italy 91 85 84 85 72
Cyprus 81 69 69 66 75
Latvia 69 56 53 51 87
Lithuania 74 66 63 61 85
Luxembourg 100 101 103 97 114
Hungary 78 69 61 66 97
Malta 73 58 52 53 95
Netherlands 113 131 140 122 115
Austria 107 116 117 114 117
Poland 65 49 39 51 70
Portugal 78 62 54 65 75
Romania 60 40 33 41 65
Slovenia 70 56 49 58 69
Slovakia 73 56 52 56 67
Finland 105 107 107 107 108
Sweden 126 163 155 165 185
United Kingdom 115 129 111 143 143
Croatia 71 59 58 68 53
FYROM 48 31 28 33 34
Turkey 74 57 49 66 68
Switzerland 124 155 169 145 142
Iceland 111 113 124 101 123
Norway 124 133 136 129 135
Maximum 128 163 169 165 185
Minimum 48 31 28 31 34
Max. / Min. 265 526 604 532 544

Table 1 above displays PLIs for GFCF, total construction and the three main components of construction works: residential buildings, non-residential buildings and civil engineering works.
The highest indices are found for Sweden that shows maximum PLIs for total construction (163), non-residential buildings (165) and civil engineering works (185).
Switzerland is the most expensive country for residential buildings, registering a PLI of 169.
The former Yugoslav Republic of Macedonia registers the lowest PLIs for total construction (31), residential buildings (28) and civil engineering works (34), while for non-residential buildings, the minimum is found for Bulgaria (31).
Box 2: Analytical categories, basic headings and bills of quantities in the 2005 survey
The scheme below shows the bills of quantities priced by countries for the 2005 construction survey and the basic headings and analytical categories that group them. The 15 bills of quantities and their alternatives were made up of 261 chapters (or major components) and 1,395 items (or elementary components).
  1. Residential buildings
    1. One or two dwelling buildings
      1. Detached house
      2. Portuguese house
      3. Nordic house
    2. Multi-dwelling buildings
      1. Apartment
      2. Apartment (updated)
  2. Non-residential buildings
    1. Industrial buildings
      1. Factory building
      2. Factory building (updated)
    2. Commercial buildings
      1. Office building
    3. Agricultural buildings
      1. Agricultural shed
    4. Other non-residential buildings
      1. Primary school
  3. Civil engineering works
    1. Transport infrastructures
      1. Asphalt road
      2. Concrete road
      3. Bridge
      4. Bridge (up-dated)
    2. Pipelines, communications and power lines
      1. Sewer main

Price dispersion of construction products

Table 2: Coefficients of variation by product sub-groups for 2005

  Euro area13 EU15 EU27 All 33
Total construction 24.4 23.6 39.8 41.8
Residential buildings 29.5 27.0 45.5 47.9
Non-residential buildings 22.4 23.2 39.8 40.5
Civil engineering works 17.3 24.5 29.6 33.0

Table 2 above, which is based on table 1, shows the price dispersion within the Euro area (EA 13), the EU 15, the EU 27 and all the 33 countries participating in the comparison programme. This price dispersion is measured, for each product group, by the coefficient of variation, i.e., the standard deviation expressed as a percentage of the arithmetic mean of the countries' PLIs.
The widest price dispersion is for residential buildings, for which the group of all 33 countries records a coefficient of variation of 47.9 per cent. The lowest dispersion for this category corresponds to the Euro area (EA 13), with a coefficient of 29.5 per cent.
The product sub-group for which price levels are more homogeneous is civil engineering works. In this category the Euro area shows, as usual, the lowest coefficient of variation, with 17.3 per cent, while the highest dispersion is found again in the group of all the 33 countries, with a coefficient of 33.0 per cent.
For total construction, the Euro area shows a coefficient of variation of 24.4 per cent, while the group of 33 countries records 41.8 per cent.
For all product sub-groups table 2 shows that the Euro area and the EU 15 register relatively low coefficients of variation, while the EU 27 and the group of all 33 countries show the highest dispersion. The reason for this is that the latter two groups include countries that show both the highest and the lowest PLIs. This fact can be seen in table 1: countries like Switzerland or Norway show very high PLIs for all categories, while countries like the former Yugoslav Republic of Macedonia and Bulgaria register very low PLIs, also for all categories.
1 Statistics in Focus, Economy and Finance 108/2007, Prices; EUROSTAT

Published on 20.11.2007

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