Acoprovi: high cost of new housing in GSD due to “inflationary pressures” on materials

Santo Domingo – The high cost of new homes being erected in Greater Santo Domingo is due to “inflationary pressures” in the costs of some construction materials, such as steel and cement, the Dominican Association of Builders and Housing Developers (Acoprovi) told Listín Diario.

“In the case of cement, from January 2020 to April 2024, in the Index of Direct Costs of Housing Construction (ICDV), it has registered a significant increase of 49.63%,” the guild explained after being asked about this sector’s upward trend.

The situation has caused cement, a material par excellence of construction companies, to present up to 18% in construction costs, Acoprovi indicated in a statement.

The same has happened with steel, according to the guild, although it did not specify the current state of its cost in the market.

For Acoprovi, these factors, including increases in other materials, “represent a significant challenge” for the country’s construction sector, especially for Low-Cost Housing (VBC) and “other constructions of social vocation.”

The increase in the Index of Direct Costs of Housing Construction could also be another example that confirms the sector’s positive behavior: in June, this index closed at 233.12 percentage points (p.p.), on average, registering an increase of 8.88 points, compared to May, which was 224.24 p.p., according to the bulletin published by the National Statistics Office (ONE) on Tuesday, 22.

In percentage terms, the monthly positive variation of the ICDV was 3.96%, compared to May, which was 0.23%.

“From December 2022 to date, the index showed a cumulative variation of 5.79%. When comparing the results of June 2024 with those of June 2023, the index has shown a variation of 6.18%,” explained ONE.

TYPES OF HOUSING
The ICDV analyzes the variations experienced by the four types of housing. And all of them have increased: the single-family of one level rose 4.80% in June, and the index of direct costs for its construction closed at 236.19 percentage points.

Two-story single-family rose 4.11%, and the CDCI closed at 235.72 percentage points. Four-story multifamily increased by 3.77%, and the index of direct construction costs was 228.27 percentage points.

Multifamily housing of eight or more stories represented a positive variation of 3.15%. The ICDV was 231.29 percentage points.

According to ONE, the ICDV is a statistical tool that tests the construction cost of these four housing types in the National District and Santo Domingo. For this purpose, indirect costs such as land, design, construction permits, financial costs, and the construction company’s profits are excluded.

RENTAL
The Dominican Association of Builders and Housing Developers pointed out that the lack of development in the real estate market, especially in housing rentals, and the need for updated regulations “that are consistent with the current context” have caused a “disproportionate” increase in the price of home rentals in Greater Santo Domingo.

The guild said, “We seek to provide the conditions to establish rental costs that are consistent with the different social and economic contexts of the country.”

Last Thursday, 25, the Chamber of Deputies approved the first reading of the draft general law on real estate rentals and evictions. This law would regulate the relations between homeowners and tenants.

For Acoprovi, renting a dwelling has an “undeniable” social function; however, it recognizes that “it does not cease to be a business.”

“This social function is supported when it responds to economic and not ideological parameters. That is why, in addition to the purely economic, rental housing must be profitable and must have legal security, because if the right of ownership is not defended, there will be no incentive for someone to place the trust and security of their property in the hands of another person,” he said.