Housing prices are rising and building materials are becoming more expensive – Krajina – PRAVDA.sk

The construction sector is most affected by the lack of building materials and their high prices. “These are mainly steel, aluminum and other types of metals, as well as plastics, from which polystyrene or various plastic pipes and tubes are made.

At the same time, according to an analysis by the 365th Bank, construction output was still lower in July than last year, by almost -4 percent. New constructions and reconstructions are also about a tenth lower.

Construction of highways and civil engineering fell by more than -14 percent. Slovak construction output is still lagging behind the period before the new coronavirus pandemic, by -17 percent. “Construction is one of the sectors that has been hit hard by the pandemic. Construction output experienced a sharp decline during the crisis, from which it has not yet recovered. Many construction companies started to cut off investments during the crisis or postponed planned construction to a later date, “said bank analyst Jana Glasová. It is positive that the” pandemic slowdown “started housing construction in the second quarter of this year. According to her, the more significant growth of this housing construction is also due to the deferred construction, which did not take place during the pandemic.

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The construction industry is also plagued by rapidly rising prices of cement, wood, glass, as well as high prices of oil, which is used not only for transportation, but is also, for example, an input raw material in the production of asphalt. We can say that all these raw materials recorded a price increase of several tens of percent, “Glas continued.

Data from the Statistical Office (SO) of the Slovak Republic show that the prices of building materials in Slovakia are growing. In July, their growth reached double digits, as their prices were 12.5 percent higher than last year. The rise in prices also applies to construction work, which was 5.5 percent more expensive year-on-year in July.

According to the statistics of the National Bank of Slovakia (NBS), prices on the Slovak real estate market increased by 18.6 percent year on year in the second quarter of this year. At the same time, real estate is reaching double-digit year-on-year growth for the fifth consecutive quarter. Even in the quarterly comparison, real estate prices rose by 6.3 percent. “Despite the corona crisis, prices on our real estate market are rising sharply, and have been rising throughout the past year. And we expect that the rise in real estate prices will continue this year as well. But the cards will still be shuffled mainly by the third wave of the pandemic, “Glasová stated.

According to her, the reason for rising prices is primarily the long-term weak supply of real estate, which cannot satisfy demand. “New construction is basically not catching up with the rapidly growing demand, and the corona crisis has made this situation even worse. Thus, the supply of real estate will remain weak, which will push up the growth of apartment and house prices. Upwards, prices on the real estate market are currently being pushed by rapidly rising prices of building materials, ”added Glasová. In addition, according to her, demand is also supported by the fact that interest rates on loans are still at the level of historical lows, which attracts people to buy and pushes prices upwards. Given the pandemic and the low interest rates of the European Central Bank (ECB), Glas does not expect credit market rates to rise significantly next year. Thus, low rates will support demand for real estate during this year and probably next year as well.