Self-built homes in Thailand hit by 5-8% cost hike as Russia-Ukraine conflict pushes up prices

Construction News
A construction worker at a condominium site in Thon Buri’s Wutthakat area.

Self-built homes in Thailand hit by 5-8% cost hike as Russia-Ukraine conflict pushes up prices

Prices of self-built homes will rise 5-8% after the Russia-Ukraine conflict pushed up prices of metals and fuel by more than 50% in less than a month, according to the Home Builder Association.

Woravut Kanjanakul, the association’s president, said metal prices, which account for 20% of the cost of home construction had risen by 50% since the war started three weeks ago.

“Nickel is a metal which had the highest jump in price with a surge of 60%,” he said. “It represents around 20-30% of system works like electricity.”

He said even though steel prices previously experienced a doubling in a year, prices of self-built homes remained flat, even during the pandemic. If the price had increased, demand would have slowed since that time.

“Housing prices will be no longer controlled as soaring home construction costs were also attributed to fuel prices which affect both transportation and manufacturing cost,” he said. “The price will be more expensive by 10% or higher if labour wages also increase.”

At present, housing prices offered by home builders start from 18,000 baht per square metre in Greater Bangkok and 15,000 baht per sq m in the provinces.

He said demand for self-built homes might ease as the ongoing conflict has a strong impact on home construction costs and consumer confidence.

The self-built home market, which saw a continuous drop since 2020 from the impact of the pandemic, had just recovered in November last year — a short period before the conflict last month started to take a toll on the market.

“In November, sales from a home builder fair were 20% higher than at the same event in 2020 due to pent-up demand,” he said. “We earlier expected the momentum would continue in 2022 but many uncertainties have arisen.”

According to the association, the home building market in Greater Bangkok last year totalled 11.5 billion baht in value, down from 12 billion baht in 2020 and 12.5 billion baht in 2019, which had risen from 12 billion baht in 2018 and 11 billion baht in 2017.

Due to the Russia-Ukraine conflict, the market would be flat with a value of 11.5 billion baht by the end of 2022. Key drivers will limit this to the middle to high-priced segments, said Mr Woravut.

“Demand in the upper segments will continue to be robust as buyers in these segments are encouraged by the mortgage loan interest rate, which remains low. Their decision will be accelerated by inflation,” he said.