SECTOR F OCUS ????
C o u n t i n g the building materials co sts Robbie Cousins assesses factors that have been driving the surge in building materials costs over the past 18 months.
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he costs of building materials have been undergoing an unprecedented surge since the beginning of 2020, with many in the industry expecting prices to remain at an elevated level for a considerable time to come. Traditionally, across a 12-month period, suppliers might experience price increases of 3% to 5%. Many absorb these increases as a matter of course on long-term contracts. The Central Statistics Office (CSO) recently stated that several materials providers had experienced price increases of over 30% in the past 12 months. Add to this a shortage of products, with some suppliers being forced to rationalise supply, and global distribution problems, building materials producers and providers would appear to be least well placed to benefit from the current increase in construction activity. According to a recent survey by the Hardware Association of Ireland (HAI), building materials account for 13% of the total sales price of an average home. Therefore, an increase of 20% to 30% in materials costs would result in an increase of 2.5% to 4% in the overall sales price.
WHAT THE SURVEYS SAY
In March of this year, the Society of Chartered Surveyors Ireland (SCSI) stated that house rebuilding costs spiked by 7.3% nationally over the previous 18 months. According to the CSO’s ‘Wholesale Price Index’ for May 2021, between April 2020 and April 2021, timber prices had an annual increase of 30% for rough timber (including plain sawn) and 33.7%
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Michael O’Donohoe, Country Director, Wavin Ireland, and President, Hardware Association Ireland. for other non-hardwood timber. However, the Irish Timber Frame Manufacturers Association (ITFMA) says the price that its members are paying for imported softwood has more than doubled since the start of 2020. According to the Wholesale Price Index, structural steel prices increased by up to 25.2% on the same period in 2020, with the index indicating reinforced metal prices increased by 14.4%. Another CSO survey on the impacts of Brexit on SMEs in 2020, also published in May, indicated that the rising cost of building materials remains the biggest post-Brexit worry for Irish