The price index for construction materials is one of the most important indicators. In particular, it reflects the change in prices in the construction of objects of different economic activities.
Recently, the Cyprus Statistical Service conducted a new study to find out how this indicator has changed over the last 3 years.
It turned out that the construction materials price index increased by 35% in 2023 compared to 2020. According to the report, the index reached 135.11 points compared to 100.97 points in 2020.
At the same time, the average price of 1m2 in new buildings constructed in Cyprus in 2022 was €1,178 (latest available data). As noted by the authority, the main indicators of the construction sector recorded positive growth rates in 2022 compared to 2021. In particular, output in the wider construction sector grew by 10.3 per cent to €5,564.7 million, compared with €5,044.9 million in 2021.
Value added at current prices will increase by 8.9% to EUR 1,442.4 million in 2022 from EUR 1,325.0 million in 2021. Incidentally, these data indicate that the increase in value added in the construction sector is largely due to a significant increase in the price of construction materials. The Statistics Agency report also states that new construction will increase by 15.6 per cent in 2022. It also notes that new residential buildings increased by 21.3 per cent compared to 2021, non-residential buildings decreased by 1.8 per cent and civil engineering projects increased by 18.4 per cent.
In addition, the authority stressed that the increase in the price of construction materials was one of the main indicators of the burden that Cypriot households had to bear when buying a home. Another parameter concerned loan payments, which were inflated due to the sharp rise in interest rates.
Recall that the average interest rate on mortgages in Cyprus with a maturity of more than five years reached 4.64 per cent in May 2024, a record high.
By comparison, in the corresponding month of 2022, the average rate was 2.06 percent. In other words, it has risen by 125% in two years. Therefore, for a loan of, say, 150,000 euros, the additional burden imposed on the borrower (either by increasing his contribution or by extending the repayment period) amounts to 3,870 euros per year, or 322.5 euros per month.