In most cases in which it is spoken of cheap houses (or low cost), it is a question of prefabricated houses in factories (also called preassembled). These have the advantage of being carried out in favorable environmental and labor conditions and with fully specialized labor. Raw materials and their wastes are also optimized. Only works such as foundations, the assembly of the house, and the water, electricity, sanitation, and telecommunications connections are carried out on site.


In other cases, these are “common” homes, made on-site, but the companies that market them ensure that by having a high volume of work and doing them very similar to each other (they even have catalogs), costs are optimized in the execution and acquisition of materials, obtaining very cheap houses.


Both in one case and the other, the objective is to obtain housing at a low price. To do this, they optimize execution times and offer qualities that, at a minimum, meet the requirements of current regulations.

What are we talking about when we talk about price?


Contrary to popular belief, the “final price” is much higher than the price paid to the construction company.


The final price of construction is the sum of many costs. Summarizing:


– Material Execution Budget (PEM). It is the price that involves the direct execution of the different items of work (bricklayers, installers, materials, carpenters …). It is what the builder is paid. It is used colloquially when talking about the price of the work.

– Conditioning of the plot. Although it could be included in the PEM, it usually is not. Reflects the activities that are carried out on the un-built land once the work is finished.

– Cost of the technicians. The project, Construction Director Architect, Execution Director Rigger, and Safety and Health Coordinator (usually a rigger).

– Works license granted by the corresponding City Council (usually amounts to 4% of the PEM)

– Hooks to general supply networks (water, electricity, sanitation, and telecommunications) are paid to different companies.

– VAT on all of the above (less than the license).

To have a specific reference and for guidance:


We can estimate that the PEM of a “common” single-family house of average qualities in Galicia is usually around 950-1000 $ / m2 built. This estimate depends on many factors, and the more area the building has, the lower the cost ratio will be. However, as a guide, we could estimate that a house of average qualities of 150m2 would be around a PEM of $ 145,000.


With “basic” qualities, and always complying with existing regulations, we could lower the ratio to around $ 850 / m2. Even with an exhaustive study and a very worked project, we could reach 800 $ / m2. Although many times the opposite is promised, lowering these ratios is very complicated and even reckless.


Regarding the cost of the project and the technicians, it could be estimated at $ 100 / m2 built. In this sense, it should be noted that the variation in prices today is abysmal.

Cheap Houses, Low-Cost Houses: Where’s The Trick?

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