The ghost haunting construction costs continues to hover over the sector in Portugal. Those wanting to build a house in Portugal are now faced with a scenario of price increases that has been ongoing for several months and that gained strength from March 2022, with the outbreak of war in Ukraine, and the increase being double-digit since then. In June, new housing construction costs in Portugal increased by 12.9% year-on-year, a growth, even so, less intense than that seen in the previous month (13.5%). At issue are estimates released by the National Statistics Institute (INE) at the beginning of August 2022.
"In June, the estimated year-on-year change in the New Housing Construction Cost Index (known in Portugal as ICCHN) was 12.9%, a rate 0.6 percentage points lower than in May. Material prices increased 17.2%, decelerating 1.6 percentage points from the previous month and the cost of labour increased 6.9% (6.2% in May)," the INE bulletin states.
New home construction costs in Portugal (%)
According to the same source, "the cost of materials contributed 10.0 percentage points to the formation of the year-on-year increases (11.0 percentage points in May) and the labour component increased its contribution to 2.9 percentage points.
Cost of building materials in Portugal: prices soar
INE also added that ceramic products were, amongst the various materials needed to build your own house, those which grew most in price in year-on-year terms: around 80%.
- Diesel and cork agglomerates and tiles showed year-on-year growth of over 30%,
- Steel and wood products, as well as carpentry and PVC pipes presented year-on-year growth above 20%.
All of this comes as Portugal continues to face a generalised increase in prices, with the inflation rate hitting historic highs. Therefore, these changes within the construction sector are one more pressure factor on economic activity in Portugal.
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