SANTO DOMINGO- It is not true that the price of construction materials has experienced sufficient reductions to translate into a positive impact on the price of homes, builders asserted yesterday, stating that the media currents that advocate the contrary only wish to harm the sector.
“It is not true that it is a considerable decrease; many factors influence the construction of apartments that are hitting us hard. Although the cost of freight has decreased, this reduction has not been reflected in the sector in such a proportional way,” says José Jiménez Bloise, of Roaldi Constructora.
What is happening with the construction sector in the country is a very “complicated” situation, says Juan Chalas of Cyj Ingenieros, who states that the discounts that some materials have experienced do not resemble the increases they experienced during the pandemic, citing the case of steel that increased its price by more than 30% and did not drop by even half of that increase.
Both businessmen referred to the complex situation in the field they represent, citing the rise in the cost of materials, the minimum wage for workers, the increase in labor costs and the difficulty in acquiring it; the increase in interest rates, among other factors.
“There’s no way we can lower the unit price under the current scheme. It’s not true that materials have dropped significantly and that this already impacts the final price of a construction project. We’re not at that level yet, and it’s good that it’s specified with numbers because in the end it affects the sector. We’re seen as the bad guys in the movie; the population might think we’re loan sharks, and that’s not the case,” explains Bloise, who is a project developer.
Chalas explained the reasons why his company had to increase the price of units by 15% in a project that began at the start of the pandemic. “We had the bad luck, so to speak, of selling 60 or 70% of our apartments at the beginning of the pandemic; that is, most of them were sold in January or February. We had a price increase clause, and when the cost of materials started to rise, our calculations indicated that we should raise prices by 25 to 30%,” he explained.
After analyzing the case, they concluded that although that figure was fair, they would only raise prices by 15% and absorb the remaining profits. He cites that porcelain tiles, cement, rebar, steel, and other items have increased in the national market.
“It was after we finished laying the last slab that the price of steel and concrete started to drop, which wasn't significant for us, but the drop hasn't been significant either. I mean, when the price of steel went up, it went up by up to 30% at once, now it dropped from 85 to 75 thousand pesos, which isn't that significant,” the engineer explains.
He understands that customers hear that material prices are falling, but they don't know the quantity or types of materials that are contributing to the price drop. "The situation is quite complicated.".
The price gouging seen in some businesses is also included among the wide range of factors mentioned by the builders. Chalas cited the case of two supplier companies that compete for the majority of the market in certain essential sectors, and that when one runs out of supplies, the other automatically increases prices.
“In reality, the builder finds himself in the middle without knowing and has to buy at the market price because there should be price control, but the freedom of the market allows these things to happen, knowing that they are the only option they take advantage, so the construction situation is very complicated,” he adds.
And the problem is that speculation is everywhere, Chalas maintains, because even the client argues that we were charged less, also speculating because they don't understand the numbers. “Everyone is speculating, and the builders are caught in the middle. All the price increases are things we hadn't budgeted for, and we have no incentives. In the end, many builders lose money, and nobody helps you,” concluded engineer Juan Chalas.
What APROCOVICI says
APROCOVICI, the Association of Housing Developers and Builders of Cibao, understands that the reduction in some construction materials does not impact all the price increases recorded in the last two years.
Alejandro Fondeur, president of the association, stated last September that a real estate project takes an average of two years throughout the entire development process until it is sold, and that in the last 24 months, housing development and construction companies have suffered an increase of more than 40 percent in the cost to build them.
"To speak of a significant decrease in raw materials for construction is inappropriate," said the president of APROCOVICI.
I trust that the correct signals will be sent so that a false perception is not created, and I acknowledge that the sector has been greatly affected by price instability caused by a shortage of containers, as well as the increase in international raw materials and local labor, but I disagree, as it is not true, that information is being spread that this small drop in prices compensates for the impacts that the sector has been facing.
