Czech building materials prices have fallen slightly but are still 40% higher than in 2021
Prices of materials and products consumed in the construction industry fell slightly in October, by 0.5% month-on-month and by 0.7% year-on-year, according to CSO data released today. Nevertheless, they are still on average 40% higher than they were at the beginning of 2021, according to the data from the Central Statistical Office (ČSÚ), even in a situation where the excessively high prices of building materials are one of the main reasons for the fall in new construction over the past year. At the same time, manufacturers are reporting full warehouses and some of them have already announced layoffs and closures of some production plants due to low sales. However, persistently high prices will certainly not boost demand. On the contrary.
Developers have to work with a number of costly marketing bonuses to maintain at least the current reduced level of sales and cannot afford to pay 40% more for materials than they did not so long ago. So they prefer to postpone new construction. Similarly, individual builders are holding off on building houses and some towns and municipalities are not implementing their ready-made projects. Therefore, according to the latest CEEC analysis, construction companies expect a significant decline in the market next year (by 2.7%) and a reduction in the utilisation of their construction capacities. It simply does not make economic sense to build at the current exorbitant prices.
Source: Central Group
Photo: Rezidence Radlické, Praha 5 - Radlice - Central Group