Building costs rose 4.1% over the year — but residential barely moved, and that is the number developers should look at

Georgia's construction cost index rose 4.1% in the twelve months to May 2026 and 0.5% on the month. Underneath that, the three segments went their own ways: residential building costs were 0.3% higher than a year earlier and actually fell 0.5% on the month, non-residential rose 7% over the year, and civil construction rose 6.8%. A single headline number was covering three different stories.

The single largest driver was transport, fuel and electricity, up 17.2% and contributing 2.06 percentage points of the annual rise on its own — half the headline. Materials were comparatively quiet, up 0.6% on the month. The wage line for hired employees added a further 1.12 percentage points. In short, the cost of a building rose mainly because the cost of energy and of moving materials to site rose.

If you are building flats, the input side has been unusually calm — costs essentially flat in real terms over the year. That removes one of the standard arguments for raising off-plan prices, and it puts the pressure back where it belongs, on demand and on how much unsold stock is sitting in the same city. A developer telling buyers that build costs force a price rise is, on this data, describing the non-residential and civil segments rather than their own.

Energy is the variable to keep an eye on, because it feeds the index twice — directly, and again through haulage. August's consumer price data showed the same pattern outside construction, with transport the biggest contributor to inflation. If fuel and power settle, the construction index has little else pushing it; if they do not, the segments that are heavy on transport and plant will keep pulling the headline up while flats stay where they are.