The developers have again expressed their concern about the substantial increase in the prices of the supplies that they require to build the house, especially steel and cement, which, for them, has caused a serious impact on the construction of units of the social segment, that is, one with a value of up to 320,000 pesos approximately.
Last November, National Producer Price Index, which measures the evolution of production amounts, increased 9.90% annually; However, for the construction sector, said increase was 15.12% compared to the same month in 2020.
For the National Chamber of the Housing Development and Promotion Industry (Canadevi), in the voice of its president Gonzalo Méndez Dávalos, this situation would cause that only in 2021 the price of affordable housing has increased between 4 and 7%, which has caused the credit capacity of the right holders to be exceeded and that developers build less and less this type of housing.
“Certainly the affordable housing, social housing has ceased to be produced to a large extent because it is no longer possible to match the value or credit capacity of people with the cost of the construction of supplies, ”said Méndez Dávalos in an interview.
This concern was also recently demonstrated by Germán Ahumada Russek, Chairman of the Board of Directors and CEO of Consorcio ARA, who said that, with the inflation of housing supplies, it is practically impossible to build economic units.
“With this inflation, affordable housing can hardly be done because this year it will exceed 7 percent. In construction materials, the increase in inflation will be more than 18% and it continues to grow, these are things that are not under our control, we have to go through with these types of problems “, highlighted Ahumada Russek.
Land value, another factor
The president of Canadevi, who represents more than 1,000 developers, indicated that another of the factors that spoil social housing with the credit capacity of people who require this type of unit, is the value of the land, which in some regions it has skyrocketed considerably.
“Yes, the increase in the value of inputs at the national level has had a strong impact, and also the cost of land is another circumstance that is very important,” said Méndez Dávalos.
Perspectives
In a recent study, the ai360 firm explained that in the last 10 years the increase in the prices of construction materials has tripled that of producer prices; However, he noted that this is mainly due to the upward trend in steel prices.
“Behind the increase in steel prices is a strong imbalance between global supply and demand, led by China. They also influence the interruptions in the supply chains and the shortage of containers ”, pointed out the firm.
According to the consulting firm, it is expected that steel prices have already reached their maximum level or are close to doing so, which could cause the amount of this input to begin a gradual decline in the following months.
For the firm, at the national level there are significant differences in the potential for the transfer of these increases in the final supply of housing. “The ability to transfer costs to price depends largely on the segment, both by the intensity of use of steel and cement in the building, as well as the prevailing conditions in supply and demand.”
Although the consultancy firm noted that the impact may be greater in lower-value segments, in the short term, developers will have to absorb a large part of the increase, so the increases could be reflected in the final offer in a period of six to 12 months. .
According to the firm, headed by Eduardo Torres Villanueva, developers must carry out strategies that allow them to absorb the issue of rising prices in inputs, such as negotiating prices by volume, deferring the payment of the land until the conclusion of the work or guaranteeing the price of these materials through negotiation with suppliers.
“(It could) postpone the start of construction until seeing lower prices of some inputs, which can help developers with limited options to adjust the final price or the characteristics of the project,” was limited in the analysis and it was emphasized that in In the short term, the increased costs will be absorbed at the expense of the companies’ margin.
Reference-www.eleconomista.com.mx