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Construction and the cost of materials increased 50% in one month: Is it better to buy homes at a discount or wait? - Infobae
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La construcción y el costo de materiales aumentaron 50% en un mes: ¿conviene comprar viviendas en pozo o esperar?
Hay una incipiente disminución en las ventas de cemento que genera inquietud en el segmento de desarrolladores privados. Las dificultades para evaluar un momento complejo
www.infobae.com
January 23, 2024
There is an incipient decline in cement sales that is causing concern in the private developer segment. The difficulties of evaluating a complex moment.
By José Luis Cieri
The increase in building costs generates uncertainty. But there are still more than 50,000 homes under construction in CABA
Amid marked economic instability and changes induced by deregulatory measures, the construction sector in Argentina experienced a notable decrease in cement shipments last December, marking the largest drop since the end of 2020.
This phenomenon is the result of a 50% increase in construction costs in both the city of Buenos Aires and the province of Buenos Aires, generating an upward trend in the prices of apartments that are currently under construction.
A question arises: Is it better to buy a home now or wait?
Damián Tabakman, president of the Business Chamber of Urban Developers (CEDU), acknowledged to Infobae that costs experienced a notable increase. “This increase is not limited only to construction materials, but covers various areas in the country since the change of government. Despite this, the sale prices of homes still do not fully reflect this situation, which led to a notable reduction in profit margins.”
Experts suggest accelerating construction as a defensive measure, since there is a possibility that the rise in prices will deepen, especially if inflation exceeds the dollar.
This is how the market was in December (Source: Apymeco)
In this scenario, both phenomena would be added: an increase in costs in pesos and the stability or decline of the dollar. This combination would result in a significant increase in dollar cost, a key factor for developers when making sales.
“In addition, in the current situation, the country does not provide more effective inflation hedging alternatives than investment in construction. The returns of financial vehicles, on the other hand, show negative results,” Tabakman noted.
According to the Index of the Association of Construction SMEs (Apymeco), the value of the square meter amounted to $962,307.47 and, when translated into dollars, stood at USD 851.60 per m2, which represents an increase of 264.56% year-on-year. and 29.81% month-on-month.
Matías Hernández, president of Apymeco, said: “The impact of the rise in prices is immediate, since the flows of funds are planned, and this unusual acceleration is very difficult to keep safe. A first effect is expected, followed by a readjustment, given that many prices experienced increases above what was logical, driven by uncertainty. As the weeks go by, some of them are expected to find an adjustment, motivated by the lack of demand.”
Price evolution (Source: Apymeco)
Falling shipments and opportunity?
According to the Portland Cement Manufacturers Association, sales shipments fell 14.5% last December, totaling 817,581 tons. This data contrasts with the 936,892 tons registered in the same month of 2022.The slowdown in activity is observed both in the decrease in cement shipments and in the orders (intention of new works) presented to the Professional Council of Architecture and Urban Planning (CPAU). In January 2023, 381 parcels were registered, while currently there are 324 in this Buenos Aires entity.
Experts suggest that those with savings to invest in Real Estate take advantage of the current moment, since the trend indicates that the values of homes, both used and new, could increase again in the short or medium term.
Source: Portland Cement Manufacturers Association
Alejandro Ginevra, from the GNV Group, said: “Let's hope that the quotes will settle in 60-90 days. We must be cautious as we anticipate prices to increase. The cost of construction will inevitably rise gradually, leading to an increase in the prices of new homes. Although market behavior with respect to used homes is uncertain, in the case of new units, prices will tend to rise, aligning with the global trend of increasing property values. “We continue to build and design profitable buildings, although current margins differ from previous times.”
A marked dispersion is observed in the prices of materials and supplies, accentuated by the devaluation of the peso. In addition, the salary increase approved for workers of the Construction Workers' Union of the Argentine Republic will also have an impact.
For its part, sheet metal carpentry, vehicle ramps and elevators registered the greatest increases, ranging between 111% and 68.90% per month. Countertops, cement and porcelain tiles experienced more moderate increases, ranging between 12.12% and 19.80% per month.
In standard homes, the price in CABA per m2 starts at USD 1,700 for sale and premium homes start at USD 2,500 and can go up to more than USD 5,000 per m2, depending on the project and the amenities offered.
Slowdown in the start of new initiatives and in the application for construction permits, reflecting the general economic trend
Hernández highlighted: “With the new reference values, the gap between finished apartments (currently with depressed prices) and construction in progress was significantly reduced. A recovery in the price of m2 in dollars is anticipated in the medium term, so purchasing today is convenient.”
Specialists emphasize the importance of carrying out a detailed analysis. They highlight the need to work meticulously on the optimization of designs and close collaboration with construction companies to ensure competitive prices.
Ginevra emphasized that “the market is experiencing changes, where professionalism, knowledge of the market and the product are essential. There is a tendency to reduce spaces and modify features such as balconies and grills. It is key to consider these factors when quoting and calculating the costs of buildings, underscoring the importance in decision-making to face future uncertainty.”
Currently, it is advisable to wait for prices to reach a equilibrium point before evaluating new projects to develop. A slowdown is observed in the start of new initiatives and in the application for construction permits, reflecting the general economic trend.
Hernández concluded: “There are high expectations in the sector, especially due to the good anticipated harvest, since this sector tends to allocate part of its profitability to construction.”
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