Posted on 30 Jul 2008
A construction project in
The soaring price of construction materials has hit many
homebuilders where it hurts the most a€“ in the hip pocket.
Standing in front of a three-story house under construction
in Ho Chi Minh Citya€?s Thu Duc District, Vo Van Diep was grappling with a vexing
question: how could he find the additional VND200 million (US$12,000) required
to complete construction of his house.
Diep said he and his wife had set aside some VND700 million
($41,800) and began building the house in March.
But soaring cement prices in May meant construction was
delayed for two months.
After Diep restarted construction early this month, the
soaring steel prices forced him to delay the work again.
a€?With the cost of construction material surging 30 percent
on what was estimated, I am afraid my family cannot earn enough to afford the
extra cost,a€? Diep said.
CEMENT PRICES COOL
Although the price of many construction materials has
soared, there are signs cement prices may have peaked.
Popular brand Ha Tien is retailing for a maximum of VND72,000
($4.75) compared with VND76,000 ($4.52) in May when the cement prices were at
their highest.
The prices are expected to continue to fall next month as
demand dwindles because many public projects have been delayed as part of the
governmenta€?s inflation-fighting agenda.
Homebuilder Dung said since mid-June she had to pay tens of
millions of dong more than she expected to buy steel, as well as wear the cost
of higher brick prices for her house in HCMCa€?s Tan Binh District.
a€?I am recalculating everything so that I can scrimp on
skyrocketing construction materials as much as possible,a€? Dung said.
The plights of Diep and Dung are common among homebuilders
in HCMC who have been hit by the soaring prices of construction materials,
particularly steel.
The upward trend
The prices of housing and construction materials rose 24.9
percent in July from a year earlier, the General Statistics Office (GSO) said
last week.
The steel price Monday averaged VND21 million to VND 22
million ($1,253-$1,313) a ton.
The price of steel was quoted between VND13 millionand VND14
million per ton last December and VND17 million per ton in April.
Major steel firms such as Vina Kyoei and Pomina said the
price of steel bars had increased by VND100,000 ($5.95) each from VND380,000-VND390,000
($22.62-$23.21) last month.
Other construction materials have also risen, exacerbating
the worries of prospective homeowners.
Dong Tam Long An, a major brick manufacturer based in
southern Long An Province, said it had increased the price of its products by
30 percent since early this month.
Other brick makers and paint suppliers said they too had
increased prices by up to 30 percent.
But many agents said despite the price rises, many people
were still rushing to buy construction materials out of fear prices would
increase further.
Many contractors have also agreed to buy construction
materials in bulk despite the fact that they would pay high prices, agents
said.
Economic experts linked the price rises to the increasing
price of imported steel billet used in manufacturing and in imported finished
steel.
Imported steel billet now costs $1,200-$1,300 per ton, up
from $735 a ton in February.
More than 60 percent of the countrya€?s steel producers depend
on imports, mostly from
Some steel producers also blame the price hikes on the many
middlemen involved in distribution.
They point out that while their prices are VND18 million
($1,071) per ton on average, consumers pay up to VND21 million per ton.
