“In the residential real estate sector, sales have decreased and the number of projects that have not yet been executed has increased. The non-residential sector continues to adjust to the structural changes—accelerated by the pandemic—in preferences for different types of properties,” reports the Central Bank of the Dominican Republic (BCRD) in its “Financial Stability Report for the first half of 2022.”
SANTO DOMINGO.- The chain of difficulties that began with the COVID-19 pandemic and the subsequent war between Russia and Ukraine has unleashed an unstoppable upward trend in the price of construction materials, with increases reaching up to 250% in the last two years.
Meanwhile, the Central Bank of the Dominican Republic (BCRD), in its recent "Financial Stability Report for the first half of 2022", reports a reduction in property sales and participation in projects under execution.
El Inmobiliariocompiled a list of more than 30 items commonly used in building construction, whose prices have increased from 7 to 250%, a situation that has caused problems in one of the pillars of the national economy.
Steel bundles, one of the products most affected by the war between Russia and Ukraine—given that more than 35% of the iron and molten metal consumed in the country came from Ukraine—have increased in price by 70%. In 2020, this material sold for RD$49,500, while currently its price is RD$84,000.
Reinforced concrete 210 has skyrocketed by 25%, currently costing $7,250, gray cement bag by 30%, the unit of electro-welded mesh rolls 2.3x10x10 has risen by 96%, while the 2.5x10x10 size increased by 102%.
The price of galvanized wire #18 per quintal rose 110%, from $3,229.30 to $6,774.90; the price of raw wood board feet increased by 67%, currently costing $113.30; and the price of porcelain tile flooring per meter skyrocketed by 227%, from $550 in 2020 to $1,798.
The price of #4 electrical wire increased by 35%, #6 rose by 46%, #8 increased by 33%, #10 had a rise of 30%, while #12 almost doubled its price with a 90% increase.
The block #6 unit jumped 20%. Plumbing materials also contributed to the upward trend; a 20x1/2 AQP female 90° elbow saw a 180% increase, a 20mmx4m polypropylene pipe rose 56%, a 20mm elbow registered a 26% increase, a 20mmx4m PN20 polypropylene pipe, 57%; and the 25mmx4m PN20 size experienced a 52% increase.
Ceramic tile adhesive increased by 33%. The price of 18mm gas pipe rolls skyrocketed by 250%, while 15mm pipe rose by 53%. Domestic 4x19 PVC pipe increased by 24%, imported 1/2x10 pipe by 57%, and locally produced 3/4x19 pipe by 18%.
Similarly, PVC for drainage #3 increased by 15%, Dominican-made 3x2 drainage by 19%, local size 4 drainage registered a 7% increase, and domestically produced 4x2 rose by 21%.
The local PVC drain siphon, size 2, saw a 23% increase. The national 2x90 PVC drain elbow unit rose 53%, the locally made 2x45 by 31%, and the 4x90 by 11%. Meanwhile, a 32-ounce can of blue Wet-Dry PVC cement costs $978, a 114% increase.
Only two products appear on the list with lower figures, one with a 33% reduction and the second with an 8% reduction.
Consumer Protection Agency responds to complaints
The National Institute for the Protection of Consumer Rights (Pro Consumidor) announced that it will release its resolutions today, Monday, regarding claims filed against suppliers for price increases on properties originally contracted.
“The Executive Directorate of Pro Consumidor informs all consumers who have purchased real estate and who have filed claims against their suppliers for increases in the originally contracted purchase price, that the resolutions relating to these cases will be issued and notified starting next Monday, the 18th of this month,” the statement indicates.
In the last month, Pro Consumidor has received between 125 and 130 complaints from buyers alleging that construction companies have increased the prices of their properties.
Meetings with ACOPROVI
Last December, Pro Consumidor and the Dominican Association of Housing Developers and Builders (ACOPROVI) signed an agreement aimed at guaranteeing consumers transparency in the cost and construction of homes.
Both entities agreed to include in that agreement, scheduled to come into effect in January of this year, the ordinances relating to housing construction and to clearly and transparently establish the issue of guarantees, publicity, quality and transparency in all information relating to house construction.
"We are resuming negotiations starting today and we will ensure that before January 30th it will be established in a manual that all consumers receive from suppliers the amount they are paying for and that there is no disruption or confusion regarding contractual interpretations," the official stated during a meeting held at the headquarters of the consumer protection agency.
A second meeting was reportedly held last week between the two entities, following the announcement by the consumer protection agency, in order to find an amicable solution to the situation regarding complaints made by those involved in purchasing processes.
2022 Projections
Estimates from the Central Bank of the Dominican Republic (BCRD) last year placed the construction sector with an advantageous growth rate during the first half of the year, with a score of 42.2%.
The breakdown of economic growth in the first half of 2021 shows the most significant year-on-year increases in economic activities compared to 2020: construction (42.2%), free trade zones (31.7%), local manufacturing (14.3%), transportation and storage (13.7%), mining (11.4%), and commerce (10.7%). Similarly, positive year-on-year variations were observed in: energy and water (3.9%), communications (3.5%), hotels, bars, and restaurants (2.9%), agriculture (2.4%), real estate and rental activities (2.2%), and other service activities (1.0%).
However, in its "Financial Stability Report for the first half of 2022," the Central Bank of the Dominican Republic (BCRD) reports a reduction in sales in the real estate sector. "In the residential real estate sector, sales have decreased and the number of projects not yet underway has increased; this has not yet affected the payment capacity of companies in this sector," the document states.
It highlights that housing prices continued to rise nationally, although their pace has slowed since the end of 2021. "The non-residential sector continues to adjust to structural changes—accelerated by the pandemic—in preferences for different types of properties.".
