Sunday April 11, 2021
“Price shock” for home builders
Corona makes building difficult and expensive
The corona pandemic is currently causing major price increases in the construction industry. Sometimes orders cannot be placed at all. Companies fear a wave of bankruptcies or even a standstill on the construction sites. But experts know a possible solution.
The corona pandemic has shaken up the market for building materials and is also causing problems on German construction sites. The prices for material have risen dramatically in some cases, as the German construction industry explains. The Federal Association of Color Design and Building Protection sees an “unprecedented wave of price increases for raw materials and construction materials”. He warns of a “price shock” for home builders. And this can also lead to problems for companies.
Since the fourth quarter of 2020 there has been a “very dynamic” price development for various materials, says the general manager of the Central Association of the German Construction Industry, Felix Pakleppa. “There are already some delivery problems today.” Wood has become 15 to 20 percent more expensive since September, mineral oil products by 15 percent and reinforcing steel by as much as 30 percent. The Federal Association of Color even reports price increases of around 50 percent – for thermal insulation, in some cases also for drywall profiles.
Pakleppa sees the shutdown of production in the first phase of the pandemic as the cause of the problems. When the economy in China picked up again, demand grew faster than capacity. And the onset of winter in the USA also had a negative impact.
“Standstill on the construction sites”
The Nuremberg construction guild also complains about delivery bottlenecks and even delivery stops. Often “no more insulation, wood and PVC pipes can be ordered”, says managing director Klaus Haller. Construction stops and interruptions in construction can no longer be ruled out. And the problem affects not only the customers, but also the craft, as Dietmar Ahle from the Federal Association of Color says. “Our companies cannot buffer this, there is no scope for this in the contracts with customers,” he says. According to the association, the price increases would come at a time when the capital base for builders and handicraft businesses was already getting thinner. The feared consequence: “Standstill on the construction sites and a wave of bankruptcies in the companies.”
The Association for Insulation Systems, Plaster and Mortar (VDPM) also shows rising prices and delivery difficulties. But the situation is not quite as dramatic, says Managing Director Hans-Joachim Riechers. “Not everything comes to a standstill because of it.” But he does not expect a quick relaxation either. “The raw material prices have risen exorbitantly, which means that manufacturers can only buy the quantities of raw materials that are absolutely necessary,” says Riechers. “This means that flexibility in production is lost, and production is not dumped.” Unforeseen cases may then not be able to be served.
Both the VDPM and the construction industry see a possible countermeasure in the local production of building materials. “It cannot be that we are dependent on imported building materials if we have large quantities of mineral building materials in our own country,” says Pakleppa and calls for more gravel, sand and gypsum to be extracted again in Germany. There are no major fluctuations in building materials that are produced to a large extent regionally.
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