Gérard Vittek Head of section “index of the cost of construction and rent” 25 th May of 2015 The construction cost index for STS at INSEE (France) Cost of construction

25 th May of 2015 The construction cost index for STS at INSEE (France) Toward STS Package Until STS package Eurostat wanted monthly 1.Construction costs index (320) 2.Material costs index (321) 3.Wage costs index (322) And optionally, if this as not possible a output price index (310) With the STS Package, Eurostat has changed its requirement on construction index and will ask quarterly for an 1.Output Price index in Construction (OPC) in a few years (2018-sq.) 2.In NACE and not any more in construction categories.

25 th May of 2015 The construction cost index for STS at INSEE (France) Wage costs index (322) At INSEE, we have chosen Labour costs index in construction in order to measure the cost of labour in construction of residential building. When we will be able to publish a more detailed Labour cost index in construction, for instance construction of new residential, we will use it. But the best input is now Labour costs index in construction Caution: Labour cost index is more or less revised each quarter from +0.1 or 0.2 point over several years.

25 th May of 2015 The construction cost index for STS at INSEE (France) Wage cost index (322): LCI in construction

25 th May of 2015 The construction cost index for STS at INSEE (France) Wage cost index (322): LCI in construction

25 th May of 2015 The construction cost index for STS at INSEE (France) Material costs index (321) The composition of the costs item “materials” is respectively specific to the construction of buildings, to the specialised construction activities in existing buildings (finishing), to the engineering works and to the specialised civil engineering works. The weightings at all levels of aggregation are sourced from the confrontation between the 2012 Structural Business Survey in construction and the studies of the professional unions studies in the framework of the preparation of the Buildings (BT) and Civil engineering (TP) indices in base 2010 for contract escalation. ESA gives the amount of materials used buy the firms in an activity. After, with specialists of the activity (federation, head of firms,engineers, etc.) we can determine on a sample of unit the list of materials used and their weights.

25 th May of 2015 The construction cost index for STS at INSEE (France) Materials

25 th May of 2015 The construction cost index for STS at INSEE (France) Materials

25 th May of 2015 The construction cost index for STS at INSEE (France) Materials

25 th May of 2015 The construction cost index for STS at INSEE (France) Construction costs index (320) The statistical construction cost index can be revised and it is the main difference with the cost of construction index for escalation of contracts. This is why the database can be update every month on the past months and it explains the chose of the labour cost index. The weights of the items are those of the cost of construction index for exclamation of contracts when it corresponds, or are sourced in structural business survey.

25 th May of 2015 The construction cost index for STS at INSEE (France) Construction costs index (320) The statistical construction cost index can be revised and it is the main difference with the cost of construction index for escalation of contracts. This is why the database can be update every month on the past months and it explains the chose of the labour cost index. The weights of the items are those of the cost of construction index for exclamation of contracts when it corresponds, or are sourced in structural business survey.

25 th May of 2015 The construction cost index for STS at INSEE (France) Construction costs index (320)

25 th May of 2015 The construction cost index for STS at INSEE (France) Output price index (310) With STS Package, Eurostat asks for an output price index in construction instead of cost construction index. The reason is to take in account the fluctuation of the margin and analyse the real price of transaction in construction. It is interesting to compare output price index in construction and A real estate bubble can appear and is easier to find with an output price index.

25 th May of 2015 The construction cost index for STS at INSEE (France) New housing price index VS producer price index in construction

25 th May of 2015 The construction cost index for STS at INSEE (France) Introduction The Ministry of Ecology, Sustainable Development and Energy carried out a survey entitled “Cost price of new housing” based on about 1,600 planning permissions taken from the From this survey, INSEE was able to produce a “Construction Cost Index”, according to regulatory values since 1953, which is currently produced using a hedonic model, and a producer price index for the construction of new housing for residential use, for strictly statistical purposes. In both instances, these are in fact producer price indices for housing construction activity (part of the class of activities: “ Construction of residential and non- residential buildings”): the differences lie mainly in the change in reference period (Q versus year 2010) and the revision policy of the published series.

25 th May of 2015 The construction cost index for STS at INSEE (France) Producer price indices for construction of new residential buildings Producer price indices for construction of new residential buildings is the answer to STS Package for output price index (310). The reference period is year 2010 This index can be update after its publication

25 th May of 2015 The construction cost index for STS at INSEE (France) Output price index (310) When the output price index for construction is calculated, it can happen that : –Some answers are not available –Some information are not known (for instance how to take in account a modification of the area used in the model) –A law or a new material modifies the level of the prices But you must publish the index even with a lack of information. You need to estimate a part of the data and you publish the result. For the legal index used for contract escalation that is all what you have to do. But after you can improve the Output price index (310) sent to Eurostat.

25 th May of 2015 The construction cost index for STS at INSEE (France) Output price index (310) In France, the output price index in construction is obtained as the output price in construction (1953Q4=100) transformed in year 2010 = 100. But, the past year we have a change in the area used in the hedonic models. The first estimations can be improved. We will update the data sent to Eurostat in calculating the past periods with the best conversion that we known now as thy where available since March 2012 In using the hedonic models on more past periods in order to take better in account the quality effect. In improving hedonic models in the past. By this way we will help Eurostat to analyse the change in prices in construction in Europe.

25 th May of 2015 The construction cost index for STS at INSEE (France) Producer price index versus second-hand price index

25 th May of 2015 The construction cost index for STS at INSEE (France) Prices and Costs in construction in France

25 th May of 2015 The construction cost index for STS at INSEE (France) Consumer price index versus Construction price index

Thank you for your attention! Contact M. Gérard Vittek Tél. : Insee 18 bd Adolphe-Pinard Paris Cedex 14 Informations statistiques : / Contacter l’Insee (coût d’un appel local) du lundi au vendredi de 9h00 à 17h00 The construction cost index for STS at INSEE (France)