Homebuilding prices swell
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Homebuilding prices swell

An aerial view of a residential area on Bangkok's Ratchadaphisek Road. (Photo: Somchai Poomlard)
An aerial view of a residential area on Bangkok's Ratchadaphisek Road. (Photo: Somchai Poomlard)

The standard home construction price index rose 6.2% year-on-year in the third quarter, a new peak and the highest increase in a decade, largely attributed to soaring fuel prices.

Vichai Viratkapan, acting director-general of the Real Estate Information Center, said construction prices for standard homes have continued to escalate since the first quarter this year.

"The key driver was fuel prices, which soared early in the year," he said.

"This had a direct impact on costs of manufacturing and transport of construction materials."

According to the centre, the standard home construction price index in the third quarter was 132.2, up 6.2% year-on-year and 0.8% quarter-on-quarter. The 6.2% increase was the largest in 41 quarters.

Peerapong Jaroon-ek, president of the Thai Condominium Association, said surging fuel prices pushed inflation higher, affecting the cost of property development.

"Developers should manage construction to cope with rising costs, which eventually affect home purchasing power," he said.

Mr Vichai said higher oil prices affected costs of home construction in all categories across the board.

In the salary category, the largest year-on-year increase was for structural engineering jobs, which grew by 8%.

The second-largest increase was for architectural jobs (5.7%), followed by electrical and communication system jobs (5%), while the cost for sanitary system jobs only gained 1.1%.

However, the only quarterly increase was for architectural jobs (up 2.4%), while the rest posted a decline for period, with a drop of 2.4% in structural engineering jobs, 1.5% in sanitary system jobs and 0.1% in electrical and communication system jobs.

"The quarterly decrease likely suggests that the uptick in home construction prices tended to slow, as the quarterly change continued to decline from the first and second quarters," said Mr Vichai.

In the construction materials category, the largest increase was sanitary ware, up 13.2%, followed by steel and steel products (11.5%), and wood and wooden products (9.5%).

In the labour wage category, prices in the third quarter increased 5.8% year-on-year and 5.6% from the second quarter.

"Risks for higher home construction prices remain in the fourth quarter this year as increased fuel prices are still possible, triggered by the war and rising interest rates, which will have an impact on the operation cost of manufacturers and contractors," he said.

The centre together with the Thai Home Builders Association compiled the price index of home construction costs with 2010 as a base year.

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