The cost of building houses in Thailand is seeing a spike due to rising energy and steel prices driven by the armed conflict in Ukraine. The Government Housing Bank (GHB) said construction costs rose 5.3% in just the first quarter of this year.
Vichai Viratkapan, acting director-general of the GHB’s Real Estate Information Center (REIC), said steel prices increased 35% year on year in the first quarter, as both Russia and Ukraine are among the world’s biggest steel producers with a combined 14% global market share.
Other construction materials across the board have also seen price increases, including a 4.6% climb for wood, 6.8% for concrete, and 6.6% for electronics and plumbing equipment.
Compensation for engineering and architectural work has also been rising. Structural engineers, for example, have seen a 12% increase in pay. Electrical and communications system planners and architectural designers have meanwhile seen 7.4% and 2.6% pay increases, respectively, when compared to the same period last year. Russia and Ukraine are the world’s major sources of iron and iron ore. Their combined steel production accounts for 14% of global exports. Russia is the world’s third largest exporter of steel products, after China and Japan, while Ukraine is the world’s 8th largest.
The price index for the construction of a standard home unit in the first quarter of this year is 129.8 points, up 5.3% year on year, or 3.9% up from the fourth quarter of last year.
The costs of different construction works are as follows:
- Structural engineering work up 12% year on year, or a 5.4% increase from the fourth quarter of last year. The work accounts for 28.9% of design and system work.
- Architectural work up 2.6% year on year, or 3.4% increase from the fourth quarter of last year. This accounts for 64.5% of design and system work.
- Sanitation work up 2.2% year on year, or 1.7% up from the fourth quarter of last year. This accounts for 2.9% of the design and system work.
- Electrical and communication systems up 7.4% year on year or 5.1% up from the fourth quarter of last year. This accounts for 3.7% of design and system work.
With the exception of tiles, whose prices have dropped 3.2% year on year, all other construction materials, such as wood and wood products, concrete products, iron rod and steel products, sanitation ware, electrical appliances and piping, have increased, ranging from 4.6% for wood and wood products to 35% for iron rod and steel products.
Labour costs, however, remain unchanged, said REIC Acting Director Wichai Wiratkaphan.