Construction material hikes put pressure on property prices

Prices for concrete have increased by VND100,000 (US$4.4) per tonne since the beginning of the year. - VNA/VNS Photo

VACC said prices for concrete and sand have increased by VND100,000 (US$4.4) per tonne or per cubic metre, bricks by up to 10 per cent and decorative tiles by 10-15 per cent.

Notably, since the beginning of the year, steel prices have increased to over VND19 million per tonne after seven price hikes.

VACC's president Nguyen Quoc Hiep said rampant price hikes had hit contractors the hardest as they could no longer maintain a profit margin as input prices increased.

"I'm not confident that most contractors can hold out for much longer. There have been many who were forced to exit the market as prices kept rising while investors kept delaying payment," said Hiep, "I've seen contractors going into the red because they didn't receive their payments in time due to their overwhelming financial obligations."

Hiep said the average construction price for low-rise buildings had increased by 50 per cent. By his estimation, newly signed contracts must readjust construction costs by a 20-25 per cent increase.

Nguyen Thi Thanh Huong, director-general of Dai Phuc Land SJC, said rising petrol prices were another factor that has driven prices up for contractors since the beginning of 2022. However, it's difficult to predict how much impact it will have on property prices.

Huong said the rising costs would likely hurt property developers, especially those who failed to sign long-term contracts with suppliers and contractors. She said developers might be forced to increase their prices sometime in the second or third quarter this year.

In a recent report, the Ministry of Construction said construction material prices are likely to keep going up in line with the global trend in the near future. The ministry said while supply remained ample for current demand, the rising cost has forced suppliers to increase their prices. The report said Viet Nam's total concrete output stayed at over 106 million tonnes per year and could hit over 122 million tonnes if needed.