The cost of building real estate is skyrocketing: up to €1,500 per square meter

Increased demand for real estate purchases, a shortage of available land, especially in areas that attract buyer interest, and increased market liquidity are among the main factors driving up real estate prices.

However, they are not the only ones. The rally in international prices is not limited to energy but extends to most building materials. Inflation in the construction sector is running at over 4% this year, pushing construction costs to levels even higher than €1,300-1,400 per square meter. In addition to fuel prices, which have skyrocketed, affecting transportation costs (which are of great importance to construction due to the use of excavators and the transport of raw materials), metal prices are also having an impact.

Iron, aluminum, and copper have caused a sharp increase in the cost of concrete, plumbing, and electrical work, while aluminum, which accounts for a large share of window and door installation, has also become more expensive.

There is intense concern in the construction market that prices will not only remain high but will continue to rise. For example, diesel fuel, which rose by 20.6% in August, is now even more expensive. Copper pipes have risen by 16.4% on an annual basis, iron by 16.3% and copper pipes by 12.1%. However, due to transport costs, other basic items such as bricks, plastic pipes, radiators, etc. are following suit.

Since the beginning of the year, the largest price increases have been recorded in fuel, electrical materials, and metal materials. These are increases of around 8-10%, which have resulted in the general construction price index rising by 4%. When the cost of construction reaches €1,200-1,300 per square meter, this increase translates into an additional €12,000-15,000 for a 200-square-meter detached house.

However, the increase in construction costs also affects the sale price of existing homes, as the market operates on replacement cost rather than current construction cost.