PRAGUE, 13 August 2024 - The period of unpredictable price fluctuations is probably over. Last year, prices of building materials stabilised and this year should follow the same pattern. Materials prices are expected to remain flat. Most company directors (63 %) expect construction material prices to stabilise this year. This will make it easier for them to plan and select materials for new projects. With the growing interest in eco-friendly and sustainable approaches, the promotion of alternative materials on construction sites can be expected to increase. Some respondents (22 %) do not believe in price stabilisation and expect materials to become more expensive, on average by 8 %. This is according to a survey conducted by the analyst company CEEC Research.
Its director Michal Vacek says that: "After a turbulent period when the price development of some specific building materials resembled an upward roller coaster curve, prices have relatively stabilized. But it is important to note the level at which they are - and it is up tens of percent higher than in the past, with zero vision of going back. In the case of materials inventories, construction companies now do not perceive a shortage as they did in the past, which has had a significant negative impact on prices. The sharp increase in prices corresponded with high demand and low supply, which is not happening at present and there is no sign of it."
"Given the stagnation in demand, I do not expect a significant increase in prices of building materials, we have rather seen a decrease in some commodities. Supplies are stable, there is enough material on the market," says Tomáš Hlaváček, Sales Director of COLAS CZ.
And Radek Mrázek, vice-chairman of the construction company BAK, agrees: "I expect constant prices for materials, without large price fluctuations and quantity deliveries, unless, of course, the geopolitical situation in Europe, but also in the world today, changes and commodities become more expensive. But nobody is able to predict that and we can only passively observe."
"Prices of building materials continue to rise, but the rate of growth has slowed down significantly compared to the previous year, which was significantly affected by general inflation growth. However, the outlook is not ideal - in some regions, shortages of basic building materials such as building stone and gravel are already beginning to appear. Although this is not yet a critical shortage, importation from destinations is being significantly prolonged, and prices are rising as a result." said Tomáš Koranda, Chairman of the Board of HOCHTIEF CZ, who belongs to the second group of respondents.
Most building materials are available on the market
Two-fifths of the construction companies no longer face difficulties due to shortages of construction materials (44 %). As a result, they are able to meet the agreed deadlines and continue smoothly with the implementation of planned projects. Although most building materials are available on the market, companies still face availability problems for some goods (55 %). These are mainly specialised or high demand materials. In addition to market fluctuations, complications in logistics or unexpected delays in production - and thus temporary unavailability - are among the most common reasons.
One third of companies use alternative building materials
Sustainability and innovation are themes that resonate not only among construction companies. For example, alternative building materials are already actively used by a third of companies. Their main motivation is energy saving. But the desire to minimise environmental impact is playing an increasingly important role. In practice, companies are using, for example, recycled materials, natural insulation or new composite materials.
On the other hand, two-thirds of respondents do not yet use any of the materials that would replace traditional building materials or methods. Some of the companies are reluctant to introduce innovations, for example because of their conservative approach or the larger investment that would have to be made at the beginning. Nevertheless, the trend is towards sustainability and innovation, and it appears that interest in new or alternative materials is likely to continue to grow in the future.
More than half of Czech construction companies buy at home
More than half of the companies (58 %) prefer to purchase building materials exclusively from domestic suppliers. This trend is influenced by several factors. Primarily, companies value the easy availability of goods on the local market, show significant trust in Czech companies and seek to support the local economy. Other motivating factors are the reduction of transport costs and the elimination of complications associated with international transport.
In contrast, 42 % companies surveyed had implemented a hybrid model of purchasing strategy, combining both domestic and foreign sourcing. This approach offers a wider range of materials and allows companies to respond flexibly to potential material shortages in certain markets. In addition, companies can compare multiple offers and select the most advantageous quotations. An interesting finding is that none of the companies interviewed indicated that they purchased building materials exclusively from abroad. This may reflect the dominance of local sources and suppliers within the construction sector in the Czech Republic, as well as the potential challenges associated with imports, including higher logistics costs and the risk of delivery delays. Although domestic suppliers have a clear advantage, openness to international markets remains a key element of construction companies' purchasing strategies.
Kamil Jeřábek, Managing Director of Wieneberger, completed the topic on behalf of the building materials manufacturer: "The building materials market is well stocked given the drop in demand last year. However, with the arrival of the construction season and a cautiously more positive outlook, we are resuming production again this year and will gradually replenish the entire range."
The data are based on the Quarterly Analysis of the Czech Construction Industry Q1/2024 prepared by CEEC Research, www.ceec.eu .
MgA. Helena Grofová
Spokeswoman of CEEC Research
(for) photo: svav-jan/gnews.cz-jav_07
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