Struggling to stabilize the building materials market

The continuous increase in the construction price index caused a series of construction contractors to "struggle" causing the Vietnam Construction Contractors Association to petition the Prime Minister to soon have directions to remove difficulties and obstacles for businesses.

Rising steel prices directly affect the Construction industry

According to statistics of the Ministry of Construction, the construction price index has now increased by about 5% compared to the same time last year. This is a high price in the current difficult context, significantly affecting the construction industry in particular and the real estate market in general. The main impact is due to an increase of 30-40% in construction steel prices.

Implementing solutions to minimize the negative impact of the Covid-19 epidemic and steel price fluctuations on construction activities, the Ministry has requested relevant localities and agencies to monitor and promptly update, adjust the announcement of construction material prices and construction price indexes to be practical; propose related industries to boost production and increase steel supply in the market.

Rising steel prices directly affect the Construction industry. Photo: VNA

Through research, the building materials market has experienced a year of volatility and price storms. Steel prices in 2021 increased dramatically compared to 2020, causing ministries and branches to inspect and Deputy Prime Minister Le Minh Khai asked the Ministry of Construction to coordinate with the Ministry of Industry and Trade to actively research solutions. stabilize the price of construction materials.

The increase in the construction price index has been causing a series of construction contractors to "struggle", prompting the Vietnam Association of Construction Contractors (VACC) to propose to the Prime Minister soon to direct the removal of difficulties and obstacles. expensive for businesses. According to VACC, the general price level of construction materials has now increased by about 25%, with the highest increase being iron, steel, cement... Meanwhile, most construction contracts currently apply fixed unit prices. determined, not adjusted according to the time of signing, so all contractors faced difficulties.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, shared that the increase in the price of construction materials in the context of the Government is introducing many policies to restore the real estate segment, but the The book has not yet been put into practice, showing contradictions. Therefore, it is necessary to have a policy to regulate the cost problem for the building materials industry.

According to Mr. Nguyen Quoc Hiep, President of VACC, not only big investors, but also construction contractors also have "headaches" with the problem of rising prices of construction materials. much higher than the original estimate, affecting the total investment.The force of contractors nationwide is facing the risk of compensating for losses due to high material prices, if there is no negotiation from the owner. However, with real estate products, all these costs will be included in the selling price of the product.

Stabilize the building materials market

Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association (HoREA), said that the increase in the price of construction materials will affect the price of construction products, because the formula for calculating the selling price includes the total of the building materials. 3 factors: Construction cost, selling cost and expected profit.

In which, the cost of real estate construction is constituted by two criteria: cost of land and cost of construction. The cost of land usually accounts for 15% for condominiums, 30% for townhouses and 50% for villas. Construction costs usually account for about 60% of real estate construction costs.

At recent seminars and seminars on the real estate market, most real estate businesses have unanimously proposed to relevant State management agencies to apply for adjustment of selling prices, rental prices, even asking stopped selling social housing apartments due to the impact of bank loan interest and rising construction material prices. In fact, by the end of 2021, the supply of construction materials has increased by 25% of the total investment capacity of projects.

Faced with this fact, from the beginning of January, Deputy Prime Minister Le Van Thanh assigned the Ministry of Construction to take the initiative in taking measures to stabilize the building materials market according to its competence; inspect and guide the local Departments of Construction to announce the prices of construction materials, materials, and construction price indexes according to regulations.

In Official Dispatch No. 9585 conveying the direction of Deputy Prime Minister Le Van Thanh on the implementation of the recent Long Thanh International Airport project of the Government Office, it is clear that localities, relevant agencies The agency shall coordinate with the Ministry of Construction in stabilizing the building materials market, ensuring the management of construction investment costs.

NDH