30 June 2020

2020- n° 164

In Q1 2020, the “Cost-of-Construction Index” increased by 2.43% over a year Construction cost index - first quarter 2020

Definition

The French “Cost of Construction Index” (CCI) is a quarterly index, of reference 100 in the fourth quarter of 1953, the date of its creation. CCI measures the price change of new buildings, having a primary (non-community) residential use in France. It is calculated by INSEE in collaboration with the Ministry of ecological and sustainable Transition. It is published in the Journal Officiel in the end of the third month following the quarter under review.

Although established by usage, the words "Cost of Construction Index" makes a misnomer since it is a price index, based on observation of construction contracts dealed between the clients and the firms delivering the building works, excluding other components that enter into the global cost of purchasing (land cost, costs associated with promoting, financing costs, etc.). The cost of construction itself is apprehended by other indicators including producer cost index in construction of buildings (group 41.2) calculated and published by INSEE.

The methodological information are available at : https://www.insee.fr/en/metadonnees/source/indicateur/p1626/description

Uses

Under the Law 2014-626 of 18 June 2014 (Article 9) which amends section L145-34 of Commercial Code, two indices can be used for the revision of commercial and other tertiary activities rents:

- the commercial rent index for commercial and craft activities;

- the tertiary activities rent index for activities other than commercial and craft activities.

The CCI is no longer used for revising commercial rent contracts.

Variations in CCI can be compared or reconciled with indicators of cost of production factors, such as the cost of production index in construction of buildings (group 41.2) published monthly by INSEE. Moreover, as regards the maintenance and improvement of housing, “IPEA” is the relevant price index.

The CCI is also used for compiling the volume-price breakdown in national accounts (for the branch of activity "Construction of Buildings").

Next issue: end of September 2020