War in Ukraine sends construction material prices in Thailand soaring
The Russian invasion of and subsequent war in Ukraine are driving up the prices of construction materials in Thailand, especially iron rod and steel products, the prices of which have already increased 35% year on year, according to the Real Estate Information Center (REIC) of the Government Housing Bank.
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,
The price index of the construction of a standard home unit is updated every quarter, by the GSB’s Real Estate Information Centre and the House Builders Association, using the index of 2020 as the base year and the house model of the Department of Public Works and Town & Country Planning for a 2-storey house with total area of 169m2, under the assumption that the house construction is completed in 180 days.
Wichai added, however, that this price index cannot be applied for use in the construction of multiple housing units simultaneously.