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Building and refurbishing homes costs 200% more than a year ago - Infobae
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Construir y refaccionar viviendas cuesta un 200% más que hace un año
Aunque los aumentos recientes corren por debajo o igualan la inflación, el costo de la mano de obra sigue siendo un factor de peso y el precio del metro cuadrado en dólares se ajustó
www.infobae.com
September 20, 2024
Although recent increases are below or equal to inflation, the cost of labor remains a significant factor and the price per square meter in dollars has been adjusted
By Jose Luis Cieri
Round iron, key for construction, fell 3% month-on-month recently (Illustrative Image Infobae)
With the dollar trending downward in recent weeks and the readjustment of the prices of building materials due to the decline in sales since before the end of the year, the increases in the inputs needed for both new construction and home renovation are beginning to slow down.
According to the index compiled by the Association of Construction SMEs of the Province of Buenos Aires (Apymeco), in the eighth month of the year the price per square meter of construction registered an increase of 4.68%, reaching $1,480,528.22; and although the prices of materials are no longer rising with the same inertia as last June, building or remodeling costs 200.86% more than in August 2023.
They accumulate an increase of 53.85% in 2024 “and the variation from August to July for materials was 1.05 percent. This continuous downward trend since December 2023 reflects the low activity of the construction sector, both in public works and in private real estate developments,” Gustavo Serafín Marín , president of Apymeco, told Infobae.
The monthly increases in the workforce are due to the national collective bargaining agreement. In August, an increase in the sector was approved, which is reflected in the index (but only represented 1.80%, see image).
Given the paralysis of public works and the low investment in new real estate projects (the construction and development segments rely on money laundering to boost the sector), the demand for construction inputs is very low.
Cement shipments showed a 2.6% decrease compared to the previous month and a 26.3% decrease compared to last year.
Source: Association of Construction SMEs of the Province of Buenos Aires (Apymeco)
Marín added: “The need for manufacturers, logistics companies and retailers to maintain their fixed costs and staff makes it possible for the same trend to continue.”
Items
According to Apymeco's analysis, the largest monthly increases were in sanitary fixtures (5.72%), cables (6.60%) and electrical materials (3%).As for the smallest monthly increases or decreases, they were recorded in paints (0%), taps (-3.20%) and round iron (-3.41%).
"In the index, when we refer to electrical materials, we analyze the variation in the costs of all the inputs of an electrical installation, such as boxes, pipes, cables, thermals, among others, with their corresponding impact on the item," said the executive.
Source: Association of Construction SMEs of the Province of Buenos Aires (Apymeco)
For the works
Even with economic disconnections between the city of Buenos Aires and Greater Buenos Aires, there are more than 100,000 homes under construction.The construction materials market has begun to stabilise after three years of constant increases.
Long and flat steel fell by up to 10% since last January, while finished products such as taps and porcelain tiles registered falls of 15% and 10%, respectively, driven by the drop in demand and the stability of the exchange rate.
The activity continues its course
Diego Aguirre , CEO of Construyo al Costo, said that “although the market is challenging, price stabilization and the expectation of the reactivation of mortgage credit and money laundering are motivating private developers to resume projects.”
This recovery is being seen mainly in the residential sector, where the value per m2 of new and used units showed signs of recovery, once again attracting those seeking investment opportunities in a more favorable context.
The landscape remains competitive, with a “price war” in which major players try to attract customers with promotions and tight marketing strategies.
“Companies no longer wait for customers to approach them on their own, but are actively offering products and services tailored to the needs of the market. This includes discounts, financing, and second-brand products that allow for cost optimization in construction or remodeling projects,” said Aguirre.
In developments already underway, activity is progressing within logical parameters, although they are dealing with fluctuations in costs.
While stocking strategies remain useful for protecting against future rallies, the decision of when to buy and accumulate remains critical in this environment.
Source: Association of Construction SMEs of the Province of Buenos Aires (Apymeco)
Kevin Savelski , director of Grupo 8.66, commented: “In today’s economy, the gap between inflation in pesos and the slowdown in the dollar generates a 10% monthly increase in costs, which leads several developers to pass on this increase in dollars to the prices of new construction projects. To manage these costs, developers stockpile materials after making sales, maintaining a balance between income and expenses.”
Additionally, they often reserve units as backup to cover possible unexpected increases in materials or labor.
Savelski recommended that those who are thinking about refurbishing take advantage of the freeze in the prices of materials. “It is best to stock up on materials from the beginning, since labor is paid for in advance and can be adjusted over time,” he said.
Today's buyer can take advantage of promotions and financing, and there are no delays in deliveries, which is an added advantage.
Aguirre also stressed that the elimination of import restrictions could stabilize or reduce construction costs. “If these measures are applied correctly and macroeconomic stability is maintained, we could see a drop in the value of m2, benefiting developers and consumers,” concluded Savelski.
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