The price of construction materials continued to surge in September as the global economy picks up in the wake of the COVID-19 pandemic causing global demand to increase.
The Cyprus Statistical Service reports that, compared to September 2020, the Construction material price index recorded an increase of 14.92%.
Compared to September 2020, increases were recorded in:
- Metallic products (30.64%) including iron and steel (46.29%)
- Wood, insulation materials, chemicals and plastics (15.71%)
- Electromechanical products (11.37%)
- Minerals (2.21%) including Cements (4.52%)
- Mineral products (1.50%)
The Cyprus Statistical Service notes that “Prices of materials used in construction are collected on a monthly basis based on a sample of products and suppliers. The reference date for the prices collected is the 15th each month. Prices are valued excluding VAT. The data collection is carried out by telephone, fax or e-mail. Prices of materials are based on actual prices rather than list prices.”
ING expects that “will take at least until the summer of 2022 before we expect the price of some building materials, notably concrete, bricks and cement, to drop. Construction firms’ suppliers first need to improve their historically low levels of inventories. The price of timber and steel will probably settle down earlier.
“The building materials’ price hikes have put building companies’ profit margins under pressure. This can easily lead to loss-making projects as profit margins are thin in the construction sector, generally about 2 to 4%. The development of output prices of construction projects and input prices of building materials are in general closely related. However, from 2018 until the end of 2020, contractors’ output prices increased faster than the input prices which could have resulted in higher profits. Yet, due to the higher building material costs input prices are catching up quickly and saw their biggest increase in the first quarter of 2021 since 2004 and this puts pressure on those margins.”
Construction material costs – further reading
Press release: Price Index of Construction Materials: September 2021