Another price hike in the offing

Property developers, contractors, and home-building companies have tried to reduce their construction costs by revising their project designs and by stocking raw materials, especially steel, to hedge against rising prices.

However, most said they have still had to adjust prices of their residential projects 3 per cent to 5 per cent in the second quarter of this year, even after going in for a similar price adjustment in the first quarter. 

Siam Zokei president and chief executive Yasuo Miyazaki said the company's construction costs had risen between 8 per cent and 10 per cent since last year, consequent raw-material costs rising between 15 per cent and 20 per cent.

The company has tried to keep its construction costs stable by stocking up on raw materials, especially steel and cement. However, that inventory would serve only three months' requirement, forcing the price of residential units to rise 8 per cent in the second quarter, he said.

LPN Development managing director Opas Sripayak said the company had started to adjust the price of residential units between 3 per cent and 5 per cent since the first quarter due to the same reasons as Siam Zokei.

The company is considering another increase of 2 per cent to 3 per cent.

"I believe most property developers will have to increase prices due to the high construction costs, which have been expected to increase since last year," Opas said. 

Luxury home-building company The Empire Group's managing director Suratchai Kunhakij said home-builders will also face high construction costs and will have to raise prices for new contracts about 10 per cent.

Some home-building companies have revised their housing models to serve customers with limited budgets, he said.

Meanwhile, hundreds of Thai contractors have threatened to stop bidding for government projects if the government ignores their requests for relief from soaring construction material costs.

During a seminar, "Suffer and Solutions for Contractors", 360 members of the Thai Contractors Association under HM The King's patronage, including big companies, such as ItalianThai, CH Karnchang and SinoThai, voiced their concerns.

They demanded the government revise the outdated bidding conditions within 30 days. Earlier, the association proposed 10 measures to Industry Minister Suwit Khunkitti and Finance Minister Surapong Suebwonglee, but there has been no response from the government.

Contractors have witnessed a 25-per-cent increase in construction costs mainly due to the soaring prices of steel and copper, but under existing government norms, their job value can be revised by a maximum of 4 per cent. Since August, steel prices have risen more than 100 per cent.

The association's secretary-general Angsurus Areekul said more than a million workers were now a part of the industry and they could suffer if contractors shut down business.