Concepts and definitions

Building cost index

The building cost index is an index of input prices that describes development in the prices of factors of production, materials, wages and salaries and other inputs of building trade relative to the average price level of a base year.

Building trade

Building trade refers to commercial building against payment. Cf. Independent building.

Independent building

Independent building refers to building projects undertaken by households themselves, which include new and renovation building of single-family houses, free-time residences, agricultural buildings and other domestic utility buildings without paid labour. Cf. Building trade.

Index of real estate maintenance costs

The index of real estate maintenance costs describes development in the prices of real estate maintenance tasks, such as administration, use and servicing, grounds maintenance, cleaning, electricity and water supply and waste management, and repairs and upkeep, relative to the average price level of a base year. The items of direct costs that are additionally taken into consideration include insurance, ground rent and real estate tax.

Separate indices are calculated for residential blocks of flats, commercial buildings, office buildings, school buildings, health centres and industrial buildings. An overall index of real estate maintenance costs is obtained by weighting together the indices by type of building. The relative shares of these types of buildings of the total floor area of the building stock are used as the weights. A separate index is calculated for single-family houses and is not included in the overall index.

Input of supplies

Inputs of supplies describe development in the prices of supplies and material used in the construction industry relative to the price level of a base year. The prices are monitored with an inquiry conducted among producers, wholesalers and retailers of building supplies.

Labour input

Labour input describes development in the cost of labour in the construction industry relative to a base year. It is monitored against average hourly earnings for regular working hours in the construction industry, indirect labour costs complying with collective agreements, and estimated development of earnings.

Other inputs

Other inputs comprise data on the prices of services that are not directly associated with building construction. Some of them relate to building contracting and some to the overhead costs of building sites. Data on the costs of transport, machine works and lift installations are collected by monitoring subcontracting costs.

Transfer price coefficient

Transfer price coefficients are calculated from changes in the building cost index. They are used in calculating compensations paid in transferring shares in a tenement building of a joint-stock property company or housing company or the maximum price of a tenement building financed with a long-term renovation loan.

The coefficient is calculated using the currently valid building cost index. Building cost indices of different years have their own product selections and weight structures. This ensures that the index measures correctly the structure of building costs prevalent at each point in time.

Type of building

In the building cost index 2000=100 buildings are divided into four types: residential block of flats, attached houses, office and commercial buildings and industrial and warehouse buildings. The overall point figure of the building cost index is calculated as a weighted average of the distribution of costs between these building types.

Referencing instructions:

Official Statistics of Finland (OSF): Building cost index [e-publication].
ISSN=1799-5841. Helsinki: Statistics Finland [referred: 21.6.2018].
Access method: http://www.stat.fi/til/rki/kas_en.html

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