A labor shortage coupled with rising costs for construction materials will cause home prices in Thailand to increase this year. Developers have been monitoring the situation and are trying to keep these increases to a minimum in order to meet existing demand.
“It will be a challenging year for homebuilders as the demand side is strong, but the supply side or construction costs are worrying. We need to manage costs the best to finish the units at the price we agreed with customers earlier,” Phanid Maneerattanaporn, Landy Home Director of Construction and Business Development, told the Bangkok Post.
He noted that a labor shortage continues to be a challenge for many developers with workers from abroad still unable to enter Thailand. This has driven up wages for local employees with homebuilders and construction firms engaging in a bidding war for their services.
Read More: Thai developers announce new project launch plans for 2022
That is not the only challenge facing the residential real estate sector. The price for construction materials, namely cement and steel, is another cost developers are struggling to cope with in 2022. Supalai is one firm that has already planned for the situation.
“Costs of housing development excluding land costs will likely increase by 3-4 percent this year. When combined with higher labor wages and fuel prices, housing prices will be 2 percent higher,” Supalai Chairman Prateep Tangmatitham explained to the newspaper.
Other homebuilders have noted the increase in building costs but haven’t yet determined how much of this will be passed on to homebuyers. For instance, Seacon expects construction expenditure to rise by 5-10 percent in 2022. However, the firm has yet to decide how it will adjust home prices.
Related: The foundation for ready-mix concrete is being laid in Thailand
