The Centre for Economics and Business Research (CEBR) has been busy calculating the cost of bricks. And it turns out there is a lot of money in the brick business, even more money than in pizzas.
Luke Johnson, champion of entrepreneurs, made his name when be bought Pizza Expresses, and as the company’s chairman, its share price surged from 40 pence to 900 pence.
But Mr Johnson says that Pizza Express had one major thing going for it and that is the profit margins in the pizza business. On numerous occasions, he has said that a margarita pizza costs around £7. The ingredients around 50p. So, that is quite a mark-up.
It turns out that the mark-up in the bricks business is even greater.
“A brick from a DIY shop costs on average only 89p” says CEBR. But, the cost of a single brick, when calculated from the price and size of the average house in the UK, is £47.44.
Based on research it carried out in conjunction with Barclays, it says that the average cost of a brick in London is £121.08. In Oxford, it is £95.50. It’s a tad cheaper at £91.61 in Cambridge, £71.53 in Brighton and £47.24 in Bristol.
By contrast, in Leicester, a brick costs a mere £28.58
That’s handsome mark-up, even in Leicester – from 89p raw material cost, to almost £29 when it forms part of a property.
Bricks have also risen in cost by 33% since 2006.
Of course, there is a bit more to it than this.
Maybe raw material costs are the key to profitability in the pizza business, but in the housing business what really-matters is the cost of land.
A brick in London may cost £121.08, but it is the space it takes up that really-matters. If, instead of a brick, there was some new material made of graphene or something, the cost would still be £121.08.
So, it is not really bricks that cost money, it is strategically placed air, and that has never been more expensive.