What’s the cost of building a home? It’s getting more expensive

Building a home in Nepal's capital has become considerably more expensive, with the cost of constructing a standard two-and-a-half-storey house in Kathmandu now estimated at Rs10.7 million. This represents a substantial increase from approximately Rs9 million just one year prior, according to local builders.

Ganesh KC, founder of Native Builders, explained that the surge in construction costs is largely a ripple effect of the US-Iran war. This geopolitical event triggered a sharp rise in global commodity prices, particularly impacting energy and transportation expenses, which are critical components of the construction supply chain.

The overall cost of house construction has climbed by an estimated 14 percent, according to industry professionals and government data. While labor costs have remained relatively stable, with unskilled workers earning up to Rs1,200 per day and skilled workers around Rs2,000, the price of materials has escalated significantly.

Bricks, a fundamental building material, have seen a particularly sharp increase, with prices rising by 13.41 percent year-on-year. This surge is attributed to supply-side constraints, including environmental regulations that limit traditional kiln operations as part of Nepal's cleaner kiln transition program. Record peak-season demand further tightened the brick market, pushing prices to their highest levels in five years, according to the National Statistics Office.

Despite the official data, some brick producers dispute the extent of the price increases, claiming prices have been stable for the past decade. However, the statistical office's report, "Input Price Index of the Construction Sector," highlights the significant impact of brick price hikes on housing and small infrastructure projects, noting that bricks constitute a substantial portion of the material sub-index.

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It was Rs9 million a year ago.