Housing plans in danger due to increases in construction materials
Increased materials could delay the completion of some projects.
Santo Domingo, DR
The increase in construction materials’ prices threatens the sustainability of the housing projects currently being developed throughout the country. It is of grave concern to builders, especially those competing with low-cost housing.
It is estimated that the materials most commonly used to build a house, such as cement, sand, rebar, and others, have experienced increases of between 15% and 22%.
The president of the Confederation of Small and Medium Construction Companies (Copymecon), Eliseo Cristopher, pointed out that the situation is highly worrying, above all, for small and medium producers who will not be able to adjust the cost of houses or apartments in the same measure in which the materials rise.
“To the extent that we are preparing projects to develop them under the trust scheme, the way they are done is that first the apartments are sold, and then they are built, and if at the moment when you are going to build the materials go up, delicate situations are created,” Cristopher pointed out.
He added that there are two delicate situations, one is that they cannot raise the cost of low-cost housing because the public to which they are directed is of limited purchasing power and then do not qualify for financing, and another because not many builders could have financial problems to finish the projects and can not meet with the purchasers.
The president of Copymecom indicated that it is likely that in the next few months, the courts will be full of small business people with lawsuits due to this situation.
He pointed out that with the apartments sold in dollars, a situation is also created because the dollar remains stable, but the materials go up. It is not possible to adjust the cost of sale to the cost of construction.
Updating the value of housing
Victor Manuel Valdez, a construction engineer, also expressed his concern about materials’ prices, which he said: “have risen too much.” He estimated that the increases reach 30% if one compares their cost before the beginning of the Covid-19 pandemic.
He said that this same percentage increase could be reflected in the sale of housing, above all, which will depend on the conditions of the construction companies.
Valdez explained that apartment projects that have been sold off-plan would be significantly affected since when a sales contract has been signed subject to completion, there is no possibility of readjusting the cost of housing.
He pointed out that these increases should imply a review and update of the appraisals since they should reflect the buildings’ actual costs.