The soaring housing prices and the closure of builders are all the fault of construction costs?

According to recent news reports, due to factors such as rising construction costs, some construction projects have begun to delay the delivery of houses, do not start construction at all, and even close down small builders.

Many people blame these problems mainly on construction costs, but this problem is actually a bit complicated. In addition to the increase in construction costs, it also includes excessive financial leverage, the impact of central bank restrictions, and the transfer of short-term transactions after the introduction of the real estate integration tax 2.0. The number of buildings has dropped, etc. (It is really short-term. After it hit the road in July last year, the number returned to normal around October).

But has the cost of construction increased? Of course, there has been an increase. The construction project price index (including materials and labor services) announced by the government has risen by 9.30% in the four years from 2016 to 2019, but it has risen by 15.33% in the two years from 2020 to 2021; The residential price index of 2016 to 2019 increased by 4.85%, and from 2020 to 2021, it increased by 12.24%.

Hey, it seems that the builders are right. The increase in housing prices is lower than the increase in construction costs. The builders are like snack vendors who dare not increase the price of raw materials. However, there is a problem here, that is, the real-price registration includes house transactions of various ages, and the old houses of 40 or 50 years will also be included, but the increase in construction costs should mainly affect new existing houses and pre-sale houses. s price.

Then let's take a look at the Cathay Pacific house price index for new existing houses and pre-sale houses. From 2016 to 2019, it increased by 19.12%, and from 2020 to 2021, it increased by 19.43%, which far exceeds the increase in construction costs. Just "earn less".

So what if it is a Xinyi house price index that excludes pre-sale houses, industrial houses, and older properties? From 2016 to 2019, it increased by 8.13%, and from 2020 to 2021, it increased by 22.11%. In these two years, it has increased more than the pre-sale houses that need to be built.

Of course, this is a general situation, just like buying a house in the past few years will rise, buying stocks in the past two years will rise, but there will still be people stuck. It is very likely that individual builders will have problems when construction costs rise and finance begins to tighten. It will be even worse if they see the rise in leverage and open up their leverage before. Everyone should be very careful when buying a house.

In the first two years, the housing market was full of confidence. In 2021, 170,000 residential building licenses were issued, a record high in 26 years. In the same year, 348,194 houses were transferred, which also hit a new high after 2013. Seeing that the market is hot, you can directly stud with leverage, and then blame the rising cost of construction now, there is really no reason.