Housing prices are projected to rise by 5-10% this year as the standard home construction price index continued an upward trend, with a year-on-year increase of 5.6% in the fourth quarter of 2022 amid a labour shortage.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the construction price index of standard homes in the fourth quarter of 2022 was 131.9, up 5.6% from the same period of 2021 and down 0.2% from the third quarter of 2022.
"The year-on-year rise was derived from an increase in prices of the construction design and system job category," he said. "The largest increase was in structural engineering jobs which accounted for 28.6% with an increase of 6.1%."
In the construction materials category, the prices of six items rose. The largest increase was sanitaryware at 13.2%, resulting from high oil prices which had an impact on manufacturing and transportation costs.
It was followed by wood and wooden products (9.5%), steel and steel products (7.5%), electricity and water supply equipment (3.4%) and concrete products (2.5%). Other construction materials had a price increase of 3.9%.
Only tiles had a drop of 3.4% because tile producers reduced prices to maintain the market, said Mr Vichai.
"Soaring prices of construction materials will be pushed to home prices this year which will increase eventually," he added.
When examining each quarter, the fourth quarter last year was the first time in eight quarters since the third quarter of 2020 when the construction price index of standard homes had a quarterly drop.
"The index tended to be in a slowing growth as the majority of construction categories in the fourth quarter of 2022 dropped from the third quarter," he said. "Only the cost from the labour category remained unchanged."
Chaiyan Chakarakul, chairman of executive board of SET-listed developer Lalin Property Plc, said housing prices this year would likely rise by 5-10% driven by increasing construction costs and a labour shortage.
"Since the pandemic, labour in the construction sector has been in a shortage," said Mr Chaiyan. "The government should help increase the amount of foreign labour and be open to more nationalities in the construction sector, not only four countries like today."
According to REIC, the construction price index of standard homes saw a year-on-year increase of more than 5% for four consecutive quarters from the first to fourth quarter of 2022 at 5.3%, 5.6%, 6.2% and 5.6%, respectively.
Since REIC firstly conducted the index in 2010, the largest year-on-year increase was in the second quarter of 2012 at 12.9% after a great flood in the third quarter of 2011.
The year-on-year double-digit increase continued for three consecutive quarters at 10.5%, 11.6% and 10.3% in the third quarter of 2012 until the first quarter of 2013 before dropping 0.2% in the second quarter of 2013.
Since then, the year-on-year changes saw fluctuation of no higher than 3.5% until the first quarter last year.