Building material prices drag construction costs down

2009-11-23

Amid lower demand for building materials, the prices of most are falling sharply, levelling the past years’ increases. As a result, housing construction costs decreased by over 10% over the past year.

According to the latest report from the Association of Russian Builders (ASR), between September 2008 and September 2009, prices of building materials in Russia decreased by 16.5% on average.
In the first three quarters of the year, there was on average an 8.4% fall observed in wholesale prices of basic building materials. The deepest fall, of almost 60%, was seen in cement prices, followed by concrete and limestone. Prices of ceramic bricks, sand, and cement mortar also decreased by over one-quarter. On the other hand, prices of paints and rockwool boards noted a significant increase in prices.



Between September 2008 and September 2009, the average construction cost of 1 m² of housing in prefab residential buildings decreased by 11.92%, and now hovers around RUB 30,000 (€680). This figure includes the cost of land, building design, and construction and assembly works.



The above costs do not include “non-productive” expenses such as:
- connection to utilities (approximately 4.5% of total construction costs),
- payments for development of infrastructure or allocation of a share of developments to authorities as part of the so-called “city share” (some 10% of total costs),
- payments for approvals and services of numerous authorities and state bodies such as Rostekhnadzor, sanitary epidemic service, and fire preventative service from the Ministry for Emergency Situations of Russia (up to 6%).
Factoring in these additional costs, the full actual average cost of constructing one square metre of economy-class housing in Russia is thus RUB 33,000-40,000 (€750-910).