Egypt Watch

80% increase in construction materials shakes real estate market

The monthly publication of construction material prices, issued by the Ministry of Housing, Utilities & Urban Communities, revealed an 80 per cent increase in the prices for some materials compared with the prices of the same months last year.

The publication announced the increase of steel by 62 per cent, cement by 52 per cent, cement bricks by 42 per cent, aggregate by 25 per cent, glass by 84 per cent, and mosky wood and aluminum by 69 per cent for each.

Several real estate experts affirmed that the rise of construction materials, which is continued from 2021 till now, will affect real estate prices. Accordingly, it will lead to the inability of young people to purchase units in social housing due to the difficulty of covering the monthly installments from their income. Economic analyst Abdel Naby Abdel Motaleb explained in press statements that the real problem stemming from the increase in construction materials is that it will affect real estate prices, which will prevent the government plan to provide adequate housing for the average citizen as the monthly installments of social housing will exceed the average income of young Egyptians, which destroys their ability to buy affordable housing.

An official source from the Chamber of Steel Industries attributed the increase of construction material prices, despite market stagnation, to the increase of production cost which led to the shut-down of production lines in several companies last year. He also indicated that the rise of cement prices, despite the reality that all its inputs are domestic, is due to the decline of production capacity of many of the companies because of domestic market surplus, which increases the operational cost and therefore affects the final price of the product.

The expert in real estate estimation Dr. Hassan Al-Hommosany expected that the prices will rise by 10 per cent after the increase of construction materials. He affirmed that the decline in demand with the price increase will prevent new investors from entering the industry, as current purchasing is either made for housing or as a safe store to preserve the value of the currency.