The summer Games are expected to cost $18.2 billion, The Times of London reported. However, multi-millionaire David Ross' report said building costs have risen by $206 million in the past seven months.
Plans call for a $1.5 billion Olympic Village to be built in east London and a $1.02 billion sports stadium, which was originally estimated to cost $545 million, a figure that was revised to $966 million in November.
The new price estimates conclude that contingency funds set up to cover unforeseen costs may not be enough, the Times reported.
Ross likened the jump in raw material costs, the fall in the British housing market and increased security expenses to "a perfect storm."
Tessa Jowell, the Olympics minister, said that the $4.9 billion contingency fund would be "locked away" the Times reported.
But, Ross said nearly $2 billion of the fund was already committed and a portion of what's left over would be needed to pay for housing athletes.