Welcome to Construction Physics, a newsletter about the forces shaping the construction industry. With a few exceptions, this newsletter has focused mostly on building construction in the US. It’s what I’m most familiar with, and what I’m most confident in my ability to accurately contextualize. And if construction were a globalized marketplace, we might expect conclusions drawn about the US market to generalize around the world. But of course construction is NOT a globalized marketplace, it’s a hyper-local one. So different regions will have different construction traditions, use different materials, make different capital/labor tradeoffs, and so on. Once in place, building technology tends to be difficult to dislodge, and extremely efficient methods might not diffuse through the market. So it’s useful to take a look at construction costs around the world, and see if there’s any obvious improvements the US could adopt.
Thank you for this piece! I think when people discuss construction in the USA they only focus on big infrastructure projects like highways, subways, airports, etc. These make the headlines with cost overruns, decades of time, etc. People wonder why we can't build like other countries, why it takes us 20 years to do one subway vs another country can do an entire system.
But your research shows the side that people don't consider and that is housing. America has relatively abundant and cheap housing compared to other countries and spacious as well. I do think this is a cultural difference also because other countries have people who are ok with smaller places in more urbanized areas vs America has the suburban sprawl effect. So there are unaccounted societal costs as well.
Many countries don't build houses out of timber. In rich countries, I think it's mainly in Japan and North America. Timber is not a proxy for construction costs.
What about land costs? Many of the highest numbers in your charts are for places with high incomes and relatively scarce land. Does "construction cost" include the cost of the land?
I usually assume that land costs increase housing costs (rental or purchase) and that these housing costs increase labor costs. So it was particularly interesting to see that the cost of construction did not correspond to the cost of labor.
Brian, I don't know where to begin my compliments and my thanks for providing all this. I came here because of Austin Vernon's post that was linked at Marginal Revolution. I feel like Harry Potter getting off the train at Hogwarts. As an architect, some of the material here is the perfect counterpoint to the mumbo-jumbo techno optimism that persists in my field.
For comparison, base residential building cost in Bermuda (most expensive place to live, apparently) runs approximately $6,000 per square meter, not including land. Concrete is $250/m, there is no wood construction. Broadly compliant with IBC, with supplemental regulations for hurricane resistance and rain water harvesting.
Very late comment: I suspect the housing price comparison ought to take population density into account to some degree. Comparing on a per sqft basis will of course end up with the US looking cheaper than denser European countries - smaller buildings have a higher per area cost, as you've noted in other posts.
Thank you for this piece! I think when people discuss construction in the USA they only focus on big infrastructure projects like highways, subways, airports, etc. These make the headlines with cost overruns, decades of time, etc. People wonder why we can't build like other countries, why it takes us 20 years to do one subway vs another country can do an entire system.
But your research shows the side that people don't consider and that is housing. America has relatively abundant and cheap housing compared to other countries and spacious as well. I do think this is a cultural difference also because other countries have people who are ok with smaller places in more urbanized areas vs America has the suburban sprawl effect. So there are unaccounted societal costs as well.
Overall great piece!
This would be a good paper to discuss!
Miller, T., (ed.), (1995), Multifamily housing in the USA & Sweden – A Comparative Study,
Trelleborg, The Swedish Federation for Rental Property Owners.
Many countries don't build houses out of timber. In rich countries, I think it's mainly in Japan and North America. Timber is not a proxy for construction costs.
What about land costs? Many of the highest numbers in your charts are for places with high incomes and relatively scarce land. Does "construction cost" include the cost of the land?
I usually assume that land costs increase housing costs (rental or purchase) and that these housing costs increase labor costs. So it was particularly interesting to see that the cost of construction did not correspond to the cost of labor.
Brian, I don't know where to begin my compliments and my thanks for providing all this. I came here because of Austin Vernon's post that was linked at Marginal Revolution. I feel like Harry Potter getting off the train at Hogwarts. As an architect, some of the material here is the perfect counterpoint to the mumbo-jumbo techno optimism that persists in my field.
Thank you for this information.
For comparison, base residential building cost in Bermuda (most expensive place to live, apparently) runs approximately $6,000 per square meter, not including land. Concrete is $250/m, there is no wood construction. Broadly compliant with IBC, with supplemental regulations for hurricane resistance and rain water harvesting.
Very late comment: I suspect the housing price comparison ought to take population density into account to some degree. Comparing on a per sqft basis will of course end up with the US looking cheaper than denser European countries - smaller buildings have a higher per area cost, as you've noted in other posts.
Hi, great post, and I'm enjoying exploring the archives too.
I just wanted to point out that I featured this post here:
https://www.libertyrpf.com/p/241-cloudflare-q4-streaming-churn
Cheers 💚 🥃
Very interesting, thank you! 💚 🥃