According to the latest data from the Cyprus Statistical Office, published on Wednesday 20 October, prices for building materials increased by 14.92% in September 2021 on an annualized basis.
The building materials price index for September 2021 reached 115.78 points (compared to 2015 = 100.00), an increase of 0.51% compared to the previous month.
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 in September was recorded in the following categories:
- metal products - by 30.64%,
- wood products, insulation materials, chemicals and plastics - by 15.71%,
- minerals - by 2.21%,
- electromechanical products - by 11.37%,
- mineral products - by 1.50%.
As the price of building materials continues to rise, the cost of construction work increases.
There is no doubt that continued price increases will have colossal implications for the construction sector. At the macroeconomic level, it will slow down the island's economic growth. At the microeconomic level, an increase in prices for building materials will entail an increase in property prices, high risks for contractors, sellers and investors, freezing of new projects, delays, shortages of building materials or long delivery times, etc.
Among the main reasons for the sharp rise in prices for building materials: a drop in production in countries such as India, reduced shipments from China due to the pandemic, and an increase in the cost of shipping. In addition, it should not be forgotten that in the continuing uncertainty, manufacturers are seeking to offset the potential costs of the pandemic crisis.
Obviously, real estate buyers will eventually have to pay for the rise in prices for building materials, as developers will want to compensate for their losses by increasing the cost of houses and apartments. In addition, a large number of projects that were supposed to be launched in the near future may be frozen until the situation is cleared up, and this will not happen until 2022.
As you may know, earlier the Federation of Associations of Building Contractors of Cyprus (OSEOK) announced the risk of suspension of the implementation of public development projects, the budget of which is 1 billion euros for 2022, due to a sharp increase in construction costs as a result of rising raw material prices worldwide.