The rising prices of construction materials have increased the cost of buildings by up to a fifth

Prague – The current price increases of certain construction materials have raised construction costs by up to a fifth. This is based on a recent survey by CEEC Research among more than a hundred directors of construction companies. According to 42 percent of them, their company had to suspend construction due to a shortage of materials.

"This is extraordinarily unpleasant for everyone in the market. For investors, contractors including the entire subcontracting chain, but also operators, as the costs are reflected in their expenses. The biggest problems arise for us on large construction projects for public clients, which are experiencing delays due to process reasons before the actual start of implementation," stated Tomáš Koranda, CEO of Hochtief CZ.

According to representatives of construction companies contacted by ČTK, the prices of steel and insulation materials have increased year-on-year by up to 100 percent, and for some wood products even more. They further stated that there is a shortage of construction materials, delivery times are extending, and it is difficult to predict future developments.

According to analysts, the price increase is likely to halt within months, possibly even years. The market is facing a collision of limited supply and increased demand. The supply is restricted due to closed mines and transportation routes. Demand is rising after a long-term restriction on work due to measures against the spread of the coronavirus.

Data from the Metrostav group shows that, for example, construction timber increased in price by up to 160 percent from September 2020 to the end of May 2021, concrete reinforcing steel by nearly 100 percent, and EPS foam polystyrene by 83 percent. According to data from building material retailers' websites, a kilogram of reinforcement costs between 50 and 70 crowns depending on width. A package of five polystyrene boards with a width of 50 millimeters can be purchased for around 90 crowns. An acoustic brick with a width of 190 millimeters costs about 70 crowns.

According to the CEEC Research survey, 95 percent of the surveyed directors feel the price increase of construction materials. For nearly three-quarters of the respondents, the rising prices are reflected in construction costs. Half do not have such situations contractually addressed. The main reason for not including this situation in contracts is primarily legislative restrictions.