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Next Previous precision in construction materials HOME • INSIDER • CYPRUS • Precision shock in construction materials
& nbsp & nbspΘεανώ Θειοπούλου & nbsp; & nbsp;
Land development entrepreneurs, contractors and citizens who are trying to get housing for themselves or their children are in despair, as from November 2020 when the increase in the cost of construction materials began, there was not until last March no price restraint.
Without exaggeration, all the construction materials and related services are showing a serious increase month by month, now threatening to fix the demand for housing. For many buildings under construction, the possibility of them remaining unfinished is visible, as other costs were calculated by the owners and much higher costs occur today.
SEE ALSO: & nbsp;
< b> Every month and a record of accuracy in building materials My dear … house due to increase in basic materials Households drown in increases in food, fuel and building materials
The continuing increase in the cost of purchasing building materials begins and affects the mortgages of individuals and legal entities in the construction industry, as in many cases it turns out that the money secured through loans for construction is not enough, compared to the initial estimates of households and entrepreneurs land borrowers, forcing borrowers to knock on banks' doors again to ask for an increase in the original loan amount.
According to information gathered by “F” from banks, the first quarter of 2022 went very well in terms of loan demand and disbursements, as the housing market was still under the influence of the state mortgage subsidy plan, which expired. end of 2021. From the first quarter of '21, however, onwards, the housing market began to become somewhat … strange and unpredictable and according to banking sources there are some risks. One of the main factors that upsets the housing market and especially those who have started to build and are in the middle of the process, is the identification of extraordinary problems caused by inflationary pressures and especially rising prices in construction products, while there is widespread uncertainty regarding concerns the impact on the Cypriot economy from the Russian invasion of Ukraine and the sanctions against Russian interests.
As for the first part, which concerns the increase of construction materials, it seems that households and land development entrepreneurs calculated them differently and otherwise it comes out after them, seeing that the account for the purchase of materials and services is growing and the initial cost has been exceeded. In many cases, bank loan money is not enough to complete a building or building complex, and land developers are forced to apply for credit expansion to complete the project. The extra cost resulting from the continued increase in construction materials is in many cases borne by the buyer, who is required to pay a larger amount than what was originally agreed with the developer. However, there are cases where the signed contracts oblige the land development entrepreneur to bear the additional cost of the materials himself.
Even citizens who have decided to build on their own – with partial agreements – see that the initial loan amount is not enough and ask for new credit from the banks with which they work. The banking institutions examine all the cases of the borrowers who return to them and try to determine if the customer can meet the additional financial burden and even greater borrowing.
Indicative of the situation prevailing in the market is that the increase in construction costs continues month by month, as shown by the data announced yesterday by the Statistical Service (read the relevant news below).
Concerns about the continuous increases in building materials, which also lead to an increase in the selling prices of houses and apartments, were also raised at the conference organized by fmw financial media way for real estate last week in Nicosia, where the challenges of market concern were identified. , such as the war in Ukraine and the sharp rise in inflation, which may lead to a decline in demand for construction.
Continuous increase in construction materials
prices of construction materials continued in March 2022 the upward trend of the last 14 months, with the relevant index increasing by 19.08% compared to the corresponding month of 2021.
According to a press release of the Statistical Service of Cyprus, the Price Index of Construction Materials for the month of March 2022 amounted to 125.65 points (based on 2015 = 100), recording an increase of 2.22% compared to the previous month. Compared to the corresponding month of the previous year, the index recorded an increase of 19.08%.
By main product category, increases were recorded in metal products (31.60%), in wood products, insulation, chemicals and plastics (20.87%), electromechanical articles (14.79%), minerals (7.38%) and mineral products (6.68%). In particular, in the products of iron and steel the increase from March 2021 was 34.24% and in the products of aluminum 19.5%. Significant increase in electrical materials (23.64%).
According to the data of the Statistical Service, the increase in construction costs began in November 2020 and continues … unchanged since then, with visible upward trends and onwards. It is a matter of (little) time the price index of construction materials, which in November 2020 was slightly above 100 units to reach and exceed 130 units.