According to the latest data from the Statistical Office of Cyprus, published on Friday September 17th, prices for building materials in August 2021 increased by 14.37% on an annualized basis.
The building materials price index for August 2021 reached 115.19 points (compared to 2015 = 100.00), an increase of 0.59% compared to the previous month.
As you may know, the price index of construction products reflects the change in prices in the construction of objects of various types of economic activity.
The largest increase in prices for building materials was recorded in the following categories:
- metal products - by 31.27%,
- wood products, insulation materials, chemicals and plastics - by 12.93%,
- minerals - by 2.55%,
- electromechanical products - by 11.02%,
- mineral products - by 1.26%.
It should be noted that the increase in the cost of building materials used in residential construction on the island is primarily due to the dynamics of prices in the world market, in which the Cyprus construction sector is deeply integrated, as well as to the economic consequences of the pandemic.
To revive the economy after the lockdown, many countries have decided to stimulate a number of industries through the use of reserves. One of the most popular options for such support is investment in infrastructure development and construction. This led to a rapid increase in demand and, as a result, an increase in prices for metals and other commodities.
Market participants note that prices for everything have increased over the year: from supporting structures to sockets, faucets and toilets.
The cheapest (ABS) plastic has added 70% in price, other materials have become more expensive by 40-50%. Because of this, pipes and plumbing have become more expensive. In addition to all of the above, the prices of building materials were also affected by the violation of freight traffic with China.
As you may know, since the end of last year, all importers from China have faced the problem of lack of containers, which led to an explosive growth in logistics costs.
For example, in January 2021, the cost of shipping a container from Shanghai to Cyprus increased fivefold. At the same time, even with such an increase in cost, there are problems with free containers. The cargo crisis has a direct impact on the building materials market. Because of this, faucets, fittings, sockets, switches and other electrical goods are intermittently supplied to Cypriot stores.
Price increases are uneven across price categories.
The growth in cost and the full utilization of the capacities of manufacturers of building and finishing materials affects the fact that cheap goods disappear from the range of construction stores. Manufacturers prefer to reorient to a more expensive assortment.
The largest increase in prices is observed for goods with minimum added value. That is, sawn timber grows the most in price and finished products: furniture, windows, doors.
Price changes have made it very expensive to build this season.
The rise in prices for building materials has eaten away a significant part of the profit that local developers were counting on. And it seems that this is not the limit. There is no doubt that further increases in the cost of building materials will have a negative impact on the real estate sector and may lead to higher prices for new buildings. Already, a number of Cyprus developers have raised prices for apartments and houses in Cyprus by an average of 15%. Those who have already started the renovation stage are much more fortunate. Finishing materials are not showing such strong growth.