Informations Rapides · 24 September 2021 · n° 249

In Q2 2021, the “Cost-of-Construction Index” rose by 3.88% over a year Construction cost index - second quarter 2021

Definition

The “Cost of Construction Index” (CCI) is a quarterly index, with reference 100 in the fourth quarter of 1953, the date of its creation. CCI measures the production price change of new dwellings – excluding communities such as care homes, workers’hostels, halls of residence or prisons. It is calculated by INSEE in collaboration with the Ministry of ecological 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 production price index (hence not a cost index), based on the observation of construction contracts 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 the Development of building projects, financing costs, etc.). The cost of construction itself is apprehended by other indices, such as the producer cost index in construction of buildings (group 41.2) calculated and published by INSEE.

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

Uses

Under the 2014-626 Act 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 trade and craft activities;

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

The CCI is no longer used for revising commercialrent contracts.

Variations in CCI can be compared to 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 production price index.

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

Next issue: mid-December 2021