In Latin America, the costs of building materials have increased significantly over the past two years. The ongoing war in Ukraine, coupled with rising inflation, has added even more pressure on the sector.
Mexico bears the brunt of rising building material prices
As for specific materials, the Mexican Chamber of the Construction Industry (CMIC) reported that cement, rebar and steel saw the biggest increases since December 2021. Prices for these building materials jumped 15% to 25% in Mexico. Due to this price increase, the construction budgets formulated in 2021 are expected to be too low in many cases in the country. This could leave some public and private sector projects short of the resources needed to complete them.
ConsTrack360 expects the ongoing war in Ukraine to further increase the cost of materials such as rebar and steel. According to the National Statistics Agency, the INEGI has increased by 100% in the past year, leading to the second quarter of 2022. The president of the CMIC of Tijuana, Jesús Octavio Ruiz Vargas, told Uniradio Informa that the prices steel had doubled in the past 12 months, resulting in an April 2022. Over the same period, concrete prices rose 40%, while timber prices jumped 20%. In addition to the prices of building materials, labor costs have increased by 20% in Mexico.
This increase in the prices of building materials has a different impact depending on the regions of the country. For instance,
Despite soaring building material prices, construction activity in Tijuana has not slowed down. Construction activities in different segments including medical, tourism, vertical housing, industrial and commercial developments are ongoing. Demand in Tijuana is still robust despite rising construction prices.
However, the trends are completely different in Puebla, where the construction sector’s recovery from the pandemic-induced slowdown has been stalled due to rising prices for building materials, according to CMIC Puebla President Héctor Alberto Sánchez. Morals.
According to Sánchez, there has been some activity and growth in the construction sector in the region; however, rising prices ended the recovery in the first quarter of 2022. Additionally, the war between Ukraine and Russia affects the availability and cost of materials such as aluminum, steel, glass, cement and paint. Consequently, ConsTrack360 expects construction activity to remain subdued in Mexico from a short-term outlook.
The prices of building materials have exploded in Brazil
Similar trends are visible in Brazil, where the cost of building materials has also skyrocketed. In particular, the cost per square meter of building a house has increased by nearly 50% over the past five years.
According to the National Civil Construction Cost and Index Research System (Sinapi), the average value of a square meter of a structure jumped 47.3% from 2016 to 2021. Cumulative inflation on the same period in Brazil was 28.15%. The Sinapi index has two main components, labor and material.
Over the past five years, labor costs have increased by 21.84%, while material expenses have increased by 71.32%, which is two and a half times inflation for the same period. . While prices have been steadily increasing since 2016, building material prices have increased significantly, especially in the past two years.
While global pandemic stay-at-home restrictions have supported the growth of the construction sector over the past two years, the steadily rising prices of building materials are expected to affect the growth of the industry in 2022. Indeed, costs building costs increase, but household income is not as high. Consequently, ConsTrack360 expects moderate demand in residential construction space in the short term in Brazil.
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This press release was published on openPR.