Why Bristol is among the priciest places to build

Bristol has been ranked the ninth most expensive place in the world to build and the second most expensive in the UK, according to global consultancy Arcadis.

It comes as the city faces a housing shortage, with about 20,000 households waiting for social housing and developers warning that rising labour, energy and material costs are making some schemes harder to deliver.

Bristol faces additional challenges, including limited development land because the city is densely packed, with sites that are available often irregular in shape.

Earlier this year Bristol City Council loosened requirements for affordable housing in new developments amid fears some projects had become "unviable" and would not progress.

Bristol is facing a "housing crisis", according to council leader Tony Dyer who said last month the authority needed specific funding for council and social housing to solve the issue.

House prices in the city are among the most expensive in the country - more than nine times the average local household income, according to the Office for National Statistics.

The city is also ranked as the least affordable in the country for private renters, with the average rent amounting to 45% of the average salary.

At the same time, more than 20,000 people are on the waiting list for a social home.

According to Arcadis, many of the world's most expensive places to build are mature, complex construction markets.

Simon Rawlinson, head of strategic research, said UK projects also face additional costs because of building standards and regulation.

"There's an expectation that UK buildings are high quality," he said.

"People might not believe that, but if you go somewhere like the US you'll see a very different type of building."

Regulations around environmental efficiency, biodiversity net gain, and building safety also add costs, Rawlinson explained.

"That's not to say we shouldn't have these things, but they all add complexity… and that is one of the reasons why houses in the UK are so expensive."

Bristol and London are the only UK cities in the top 10 of the Arcadis index.

Rawlinson said the city's density and limited development space help drive costs higher.

"Bristol is a very densely populated city, the sites that are now available are quite small and congested, they're not the easiest to develop so you have to do quite irregular designs," he said.

The index also noted the impact of Bristol's clean air zone and suggested competition for workers and materials from Hinkley Point in Bridgwater can push up prices.

"If you compare Bristol to Birmingham, Manchester or Leeds, it's quite a small construction market," Rawlinson added.

Affordable housing includes social housing rented out by councils and housing associations, and those that can be bought through shared ownership schemes.

Last year, 687 new affordable homes were built in Bristol - the most for 20 years.

Of those, 450 will be allocated for social housing and the remainder for shared ownership.

At that rate it would take more than 40 years to clear the social housing backlog.

In the same time period, 137 social homes were sold through the right-to-buy scheme, and work started on 565 affordable homes.

Maxine Strait, 60, has been told she will need to move because the housing association property she is living in is "unmaintainable" after years of issues with damp, leaks and mould.

"I looked this morning, there's nothing," she said.

"Loads of people are out there sleeping on sofas, because there's nowhere to put anybody."

"They are building quite a bit but it's all for students, not for the normal person on the Housing Register", she added.

One of the factors thought to be increasing private rental costs in Bristol is the number of family homes that have been converted to student houses.

Some housing experts believe more purpose-built student accommodation could help to ease future pressure on the wider housing market.

Developers face significant upfront costs for land, design, materials and labour - so they rely on investors to get projects off the ground.

Those investors want to know the development is going to be profitable, otherwise they will not build at all.

"A lot of the profit margin is there to provide a risk cushion, so there is a little bit of a return even if things go wrong," said Rawlinson.

"At the moment when you put all the development costs - the land, the materials, the labour, the finance, everything else - it doesn't give a cushion."

Temple Island was originally expected to deliver 40% affordable housing when the council agreed L&G could develop the site in 2022.

But by April 2026, the company said that would no longer be viable because of tougher regulatory requirements, and increases in labour, material and energy costs.

Council officers also said the £10.2m cost of connecting the development to Bristol's heat network was equivalent to "in the region of 50 to 60 affordable dwellings".

Councillors approved the scheme with zero affordable housing. This then meant L&G could apply for a Homes England grant to make 106 units - 20% of the total - affordable.

Defending the decision, Dyer said: "Nobody can live in planning permission.

"A stalled development delivers zero affordable homes - and zero homes overall."

Paul Smith is managing director of the second biggest social housing developer in the country, Places for People. He said he still believed Bristol can build good affordable homes.

"When you're seeing the number of affordable homes dropped through the planning system by the council, a lot of people think that's the council backtracking", he said.

"But it's actually them listening to the Housing Association sector."

He said, in some cases, developments can work better if Homes England grant funding is used to secure affordable homes.

The government has announced £39bn for social and affordable housing over the next decade, which it says will help unlock investment, including £27bn of grant funding for affordable homes outside London.

It aims to deliver 300,000 affordable homes nationwide, including 180,000 for social rent.

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