Construction materials to cost more

Original article: The Nation September 25, 2009 

Producers deny home prices being pushed up. Prices still below those in first quarter. 

Although prices for construction raw materials are expected to rise significantly in the fourth quarter and early next year, the increase will not effect residential prices, because it will not force materials prices above those in this year's first quarter, producers and building experts say. 

SCG Distribution president Kajohndet Sangsuban said cement prices had already risen from between Bt1,400 and Bt1,500 a tonne in the second quarter to between Bt1,500 and Bt1,600 a tonne in the third, an increase of 6-7 per cent. 

The increase followed higher demand for cement as developers raised their construction rates to replenish shrinking residential inventories, he said. 

However, the new price is still lower than in the first quarter, when cement cost Bt2,200 a tonne. 

The present price of steel is Bt19,000 a tonne, well below the first-quarter price of Bt37,000. 

Kajohndet said he believed the higher cement price would not raise residential prices above those in the first quarter. 

Prices for other construction materials, such as tiles, paint and sanitary-ware, remain about the same as those in the first quarter. 

"When the cost of construction is compared with that in the first quarter, we believe residential prices will remain about the same as those in the first half of the year," he said. 

Chantana Sukumanont, executive-committee deputy chairman for marketing and sales at Siam City Cement, said despite the significant likelihood of higher prices, cement would remain cheaper than in the first quarter. There will therefore be no affect on residential prices. 

SCG Cement president Pramote Techasupatkul said demand for cement had improved "step by step". 

"We saw it drop 10 per cent and 4 per cent, respectively, in the first two quarters of the year but believe it will show modest growth in the second half," he said. 

Total cement consumption is expected to be about 24 million tonnes this year, slightly lower than nearly 25 million tonnes last year. 

SCG plans to sell 17 million tonnes of cement this year. Of this, 9 million tonnes will be sold in the domestic market and the rest exported. The company is focused on boosting its cement exports to South Africa, the Middle East and Asean countries, Pramote said. 

Earlier, property developers warned residential prices would increase 7-10 per cent next year. Of this, 4 per cent will come from the expiry of property tax incentives next March 28 and the rest from rises in the cost of construction materials. 

If the government extends the period for tax incentives, residential prices will increase 5-7 per cent, because of higher prices for construction materials alone, said Thai Condominium Association president Atip Bijanonda.

Comments

[real estate Hanoi]

The continuous increase in construction material price may inhibit buyers from purchasing new property, which might be a good thing for homeowners who are planning to sell their houses.

[access panels]

I won't be surprised if cost for construction material will rise. There are lots of factors that contributes to the prices of these materials. Not only the resources are diminishing but the cost of creating this product and the man power increased as well. What we can do is to accept reality and be wise enough to decide which materials to purchase.