The cost of timber construction: is it really more expensive than concrete and steel?

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What the cost premium actually looks like

Most people assume timber costs a lot more than concrete or steel. In practice, research on our Knowledge Hub puts the gap somewhere between the low single digits and about 8%, and it varies considerably depending on the market and the structural system chosen. A national study of timber construction costs in France (2025) compared timber and concrete projects at equal energy and carbon performance and found a premium of 4.2% to 6.5%. In the Netherlands, a similar study found a comparable but noisier picture: build and ancillary costs came in 8% above a conventional benchmark on average, closer to 4% for single-family homes and 12% for multi-family blocks. That Dutch cost report breaks the figure down further — light-frame (HSB) construction actually beat the benchmark by 10%, while CLT ran 16% above it, and 3D modular timber came in 20 percentage points cheaper than 2D panelised elements. Cromwell Property Group’s UK analysis, published in Timber Buildings: Cost-Competitive Sustainable Real Estate, found an even tighter gap: 3% more than concrete, 1% cheaper than steel, alongside a 73% reduction in embodied carbon.

Most of that spread comes down to how well the contractor and supply chain know timber. A case study on Nieuw-Legmeer found construction costs of around €2,100/m² where the team had genuine timber experience, comfortably within the range of the traditional concrete scenarios it was measured against. Where that experience was missing, costs rose. Teams get faster and more cost-effective as they build more of these projects, which is a large part of why the premium continues to shrink year on year.

Capital cost is also only half the story. The cost-effective timber construction report also modelled what timber does to the investment case over the life of a building: a lower exit yield assumption added 5.7% to market value on its own, a reduced discount rate added a further 0.8%, and a 10% reduction in maintenance costs added 0.3% more — before any income from carbon storage is counted. For the fuller argument on treating timber as an asset class rather than a cost line, our Built-in benefits paper sets out why investors are increasingly viewing it that way.

Why regulation and carbon finance change the calculation

Carbon regulation is not a footnote to this cost story; it is built into it. Take the French premium again: it only narrows to 4.2–6.5% once both timber and concrete are held to the same RE2020-2028 carbon target, which the French cost study sets out project by project. Denmark has pushed further still. The Beyond the Roadmap report tracks how the country’s new BR25 regulation settled on a limit of 7.1 kg CO₂-eq per m² per year — tighter than the current baseline, though less ambitious than the 5.8 kg the industry’s own Reduction Roadmap had called for. Once a limit like that applies, a low-carbon frame is no longer optional. It is what the building must meet, and the real comparison becomes timber’s premium against the cost of hitting the same target with concrete or steel.

Carbon finance pulls the gap in from the other direction. The Nieuw-Legmeer case study illustrates the mechanism clearly: proposed CO₂ taxes push concrete prices up while carbon credits make timber relatively cheaper, so the two effects compound. The Construction Stored Carbon Certification Protocol, developed by Climate Cleanup Foundation with support from BbN, sets out how developers can certify and sell that stored carbon. Lenders are responding too: the Low Carbon Loan Guidance looks at how development finance products are starting to price in a lower carbon structure. Cost still matters here, but a comparison that considers capital cost alone increasingly understates timber’s position. Where fire performance or insurance also factor into the calculation, we cover that separately on our fire safety page.