Housing is suffering historic increases. In 2022 the costs suffered the highest increase since there are statistics and accumulates to 23% of 2020. The increase in the cost of materials up to 40% is the main reason, according to the Ministry. In public works there are two thousand deserted projects.
There are basic building materials such as lime or plaster that have increased in price by up to 40% in just a few months. This has caused construction costs to reach an all-time high, in addition to the increases of the previous year after the pandemic.
Rising prices due to inflation, first as a result of the pandemic and later with the war in Ukraine, accumulate average increases of up to 33% in construction costs during 2021 and 2022. This situation is putting the price of new residential housing in check.
For construction, materials account for 80% of its costs along with energy, transportation and labor for the execution of projects. Hence the importance for this sector of the costs of raw materials and skilled labor, so scarce and in demand in recent years.
The construction sector has raised its costs by 13%, which is added to the previous year's increase of around 8.5%. And by type of construction, all of them have become more or less expensive; non-residential building 16%, residential 10%, rehabilitation 11% and civil engineering 15%, which is in addition to the 11% of the previous year.
- Lime and plasters +40%
- Steel +33%
- Detectors and alarms +29%
- Hollow glass +23%
- Synthetic materials +18%
- Plastic tubes +18%
- Wood +18,8%
- Gypsum derivatives +16,8%
- Radiadores y calderas +16%
- Ceramic tiles +15,6%
- Mortar +15,6%
- Paints and varnishes 14,6%
- Metallic carpentry +14%
- Iron fittings 14%
- Fiber cement pipes 13,8%
(Source: Ministry of Transportation and Servimedia)
The whole sector has been shaken by having to revise its prices as costs and raw materials have risen. The National Construction Confederation, the sector's employers' association, has asked the government to correct the price revision, especially in public works contracts, but which affects the sector as a whole. At the moment, there are two royal decrees issued by the government to revise construction prices in their contracts with the public administration, to reflect the increase in the price of the works, compensating for the new situation.
If the government has approved an exceptional system for the revision of costs and prices of public contracts, evidently the private sector and residential works have also been forced to revise their prices to compensate for the exceptional increases that, evidently, they have also suffered and have had to reflect in their works and in the housing of private developers.
Price revision systems for construction works that the employers' association has harshly criticized, as it has left companies out of this compensation, the increase in energy prices, labor costs and other increases that have caused more than 2,000 public works valued at close to one billion euros to be left deserted in 2022.
"The cost increase has raised the cost of the works by almost 30% as a whole and has made it difficult to carry out many of the works that had already been agreed. That high percentage is not a profit margin that has no one right now in the construction sector, get a minimum profitability is a phenomenon," according to associations of construction entrepreneurs, as in Palencia Aecopa.
Today, the profit margins of construction companies have disappeared and housing prices have had to increase in proportion. However, despite all these readjustments, new housing has slowed down and very little is being built. This situation challenges the demand for new construction housing, causing an even greater mismatch in prices.
“"Since the pandemic began to clear, building has become a nightmare when it comes to balancing the books. In terms of residential building, which is what the study by the Navarre-based construction company (ACR) analyzes, costs have grown more in the last two years than in the previous five. The indicator with base 100 in 2015 (i.e., which attributes that value to what it cost to erect a residential building in that year) reached 130 points just before the expansion of the coronavirus. But after a slight decline in the first three quarters of 2020, it has steepened to a slope that now puts it above 170 points.
Looked at another way, building now would be 70% more expensive than in 2015." As reflected in an article in the newspaper 'El País' that reflects the words of a spokesman for the construction company ACR.
