Price Index of Input in Residential Building
Base: July 2011 = 100
As of August 2011, the updated price index of input in residential building is now
calculated relative to a new base: July 2011 = 100 points.
The updated index is the continuation of a series of indices that have been calculated
since January 1964. They have been calculated relative to various base periods.
Weights of the price index basket reflect the distribution of expenditures carried out in
residential building (for new buildings only), excluding expenditures that are considered
construction initiator expenditures, such as the price of land, payment of fees and
levies, etc., and expenditures for "big" land development.
The previous index was calculated from February 2004 and was in use until July 2011,
on the base of January 2004 = 100 points. The updated index has been calculated
principally in accordance with the conceptual framework by which the previous index
was calculated. The definition, use, and principles of the previous index have remained
unchanged for the updated index as well.
Attached is Appendix 1: 2004 Survey Weights at June 2011 Prices
The 2011 Survey
The key reference points are as follows:
1. The updated index measures changes in the prices of an updated basket of
goods and services, reflecting the compilation of inputs in residential building.
This compilation is found in the construction cost survey conducted from 2009
until 2010. The findings of this survey relate to residential building projects
whose construction was completed in 2008.
2. As before, the survey was divided into two parts: The first stage was a field
survey to chart out the conventional construction technologies in the industry,
as well as to establish an engineering structure for each building that would be
in the sample. In the second stage, a calculation analysis was conducted to
determine construction costs derived from using the main conventional
construction technologies.
An expert construction engineer, Eng. Avi Betzarti, of Mivtzar Engineers Ltd,
made the engineering calculations based on data obtained from the survey's
questionnaire.
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3. The questionnaire given to contractors related to the site and project
characteristics: topographic conditions, the slope of the compound, the size of
the plot, the need for quarrying, etc., as well as the building characteristics: the
number and types of dwellings, garage, yard, special systems, finishing work
and other works. The questionnaire related to the dwelling's characteristics as
well, i.e., the building standards.
4. Construction costs at cost level for the work phases were obtained from the
contractors, for the sake of comparison with the calculations that were carried
out.
5. The number of types of products and services whose prices were measured
was updated the current index, compared to its predecessor, and the sample of
businesses in which prices were collected was expanded.
6. Like the previous index format, the expenditure category included expenditure
being carried out in the construction industry, on materials, products and
services consumed in the process of constructing residential buildings, provided
they have measurable prices.
However, it does not include expenditure for owned equipment and vehicles.
Alternatively, expenditures were calculated for the use of vehicles, rented
transport and rented equipment.
Prices for fuel and operators were included in the total costs of rented
equipment, excluding the expenditure on a crane operator, which was
separated from the cost of renting the crane and its operation, in accordance
with the recommendations of the Advisory Committee that accompanied the
survey process.
7. As mentioned above, in the second stage of the survey, after data collection
from the contractors (see details in Paragraph 2 of this document), a calculation
analysis was conducted to determine the construction costs derived from using
the main conventional construction technologies. The calculation was made
using a model calculation of total expenditure for each product and service for
each of the structures sampled, in accordance with data received from the
questionnaires.
January 2011 prices are used for all the products and services included in the
new basket of inputs and for the model calculation of expenditures.
8. Prices of materials: The prices of materials on site were used (the prices
common in most parts of the country).
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9. General expenditures such as insurance, maintenance, offices, etc., were
distributed proportionally in the construction phases according to the extent of
the expenditure in that phase.
10. The following changes took place in the index publication format, in accordance
with the updated construction phases,:

Beginning with the August index, the Excavation Phase and Structure
Phase indices will be presented separately, unlike the present
publication (until July 2011).

Beginning with the August index, the Finishing Phase and Flooring and
Cladding Phase indices will be presented separately, unlike the present
publication (until July 2011).

Beginning in August index, the Caulking Phase will be presented as an
independent work phase (in the past, the components of this phase
were included in the other relevant work phases).
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Findings
Expenditure for Main Items

The largest expenditure of total expenditure per square meter of residential
building was for construction materials, which amounted to about 44% of total
spending.

The second largest expenditure was for wages: 42.8% of the total expenditure.
Attached is Appendix No. 2 – The Price Index of Input in Residential Building, by
Primary and Secondary Group, New Weights (based on July 2011 = 100) and
Chaining Coefficients for Continuous Indices.
In order to link the updated index to the previous index (based on January 2004 = 100),
the updated index is multiplied by the 'chaining coefficient', which is the July 2011 index
divided by 100.
Expenditure for Work Phases

The largest expenditure for a work phase was for the Structure Phase,
amounting to about 48% of the total expenditure.

Expenditure on wages was more than 50% of the total expenditure for this
phase.
Attached is Appendix No. 3 – The Price Index of Input in Residential Building, by
Construction Phases (based on July 2011 = 100) and Chaining Coefficients for
Continuous Indices.
Appendix No. 4 – The Price Index of Input in Residential Building, Weights of Work
Phases.
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The Average Expenditure per Square Meter of Residential Building
Average expenditure per square meter of residential building (not including VAT), at
July 2011 prices, was NIS 4,157. The average expenditure calculated in the previous
survey was NIS 2,907; at July 2011 prices, this expenditure equals NIS 3,846. In
comparison to the construction expenditure of NIS 4,157 of the present survey, it turns
out that the percentage of change in the expenditure per square meter of residential
building between the two surveys is 8.1%, compared with a change of 20% relative to
the previous survey.
Year
Price in NIS, not
NIS Price, at July
Percentage of Change in the Price,
including VAT
2011 Prices
Relative to the Previous Survey
0991
706
591,3
4112
79,06
598,7
700,%
4100
,9136
,9136
801%
The gap between the present expenditure per square meter of residential building and
the previous expenditure reflects the change in price resulting from changes in the
construction mix, building technologies, "consumer taste"/building standards, and the
like.
These changes are not fully expressed in the ongoing measurement or in the price
changes alone, and periodically a new survey and update of the index basket are
required.
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