Prices of construction materials fell by 4% in the first quarter of 2017 compared to the same quarter of the previous year, and the Ministry of Housing predicted in its periodic bulletin that the decline in construction material prices would help revitalize the real estate market, especially following the implementation of fees on undeveloped land, which are expected to increase supply and reduce construction costs.
The Ministry emphasized that all these factors will help real estate developers plan effectively and accurately estimate production costs over the life of their projects, and provide them with the opportunity to reintroduce housing products at prices suitable for low- and middle-income groups.
The Housing Bulletin noted that the decline in the prices of building materials—with the exception of steel— is a positive indicator for other sectors linked to the housing sector, such as industry, commerce, and services, as it directly affects demand for other construction materials and indirectly impacts investments related to their production.
Prices for most construction materials fell during the first quarter of this year compared to the first quarter of 2016, with the exception of six types of rebar.
Meanwhile, prices for all types of rebar saw a notable increase, driven by rising global prices for this construction material in major producing countries such as Ukraine and Turkey, and China’s announcement of its intention to reduce production by approximately 100 million metric tons by 2020.
The data indicated that the most significant price declines were for black blocks, which fell by more than 125 riyals per thousand blocks; the decline also included lower prices for all types of wood.
Domestic cement prices fell as a direct result of the decline in the volume of construction projects, the increase in marketable cement inventories at all factories, and the entry of “Umm Al-Qura Cement” and and ”United Cement” into production, bringing the number of cement plants in the Kingdom to 17, which supplied 4.64 million metric tons of cement to the market during April.
