The rise in interest rates has put a brake on housing construction projects for the middle and lower middle classes, at a time when the price of building materials has already reversed the upward trend that started in late 2021. The cost of financing for companies, and also for families, dictated the cessation of these investments aimed at lower-income households, says José Matos, general secretary of the Portuguese Association for Construction Materials (APMC). The risk margin increased and promoters left this segment. With the estimated decline in the money price and the stabilization of inflation, the construction sector admits that the focus on housing will return in the second half of 2024.
“The increase in the cost of living and the current level of interest rates are hitting the housing segment more sharply by creating greater difficulties both for starting new real estate projects and for those who want to buy or rent a home,” acknowledges Manuel Reis Campos, chairman of the Association of Civil Construction and Public Works Industries (AICCOPN). The statistical data leave no room for doubt. As he adds, until the end of September, municipal permit indicators for new construction show year-on-year variations of minus 0.4% in the licensed area for residential buildings and minus 10.1% in the total number of permits issued. The only positive data is the growth of 4.7% in the number of licensed homes.
Ultimately, the slowdown in housing projects occurred at a time when the price of building materials began to fall. It is recalled that the cost of raw materials and construction materials showed high and unexpected increases at the end of 2021 and during the first half of 2022 due to the disruption of global supply chains due to the pandemic and the outbreak of war in Ukraine. This year they began “a natural process of regularization and return to historically more “normal” values,” Reis Campos believes.
According to the latest index of costs for the construction of new housing from the National Statistics Institute, referring to October, steel for concrete and heavy and light profiles are among the materials that showed the greatest reduction, with a decrease of about 20% on an annual basis. annual terms, and mild and galvanized sheet steel and covering, insulation and waterproofing materials, all showing a decline of around 15%. However, ready-mixed concrete, paints, primers, base coats and varnishes and sanitary products continue their upward trend, with year-on-year growth of approximately 10%.
For José Matos, “the trend in the prices of building materials is no longer downward, but towards stabilization, although they will no longer return to the same level” as in 2021. The official admits that there is still room for a price drop in some materials, such as ceramic floors and coverings and cement. “However, the adjustment processes are long and last about six months, but in any case there are no longer any expectations of new increases,” he emphasizes. With the “normalization” of the costs of raw materials and construction materials, “larger projects have resumed”, aimed at tourism and housing for the upper class, says José Matos.
Dinheiro Vivo journalist
Source: DN
