The demand for construction materials has plummeted, with sales dropping by a third in both value and volume in May. The decline is worsening month by month, indicating a worrisome trend. Renovations are on the decline, and several new construction projects are being initiated. With the falling prices on the construction market, there has never been a better time to start building our new home or renovating the current one.
In the first five months, building materials traders experienced a sharp decline in turnover. The market declined by 24 percent compared to the previous year. Distributors reported a 32 percent decrease in sales and a 35 percent decrease in turnover in May. This growing backlog compared to the previous year is cause for alarm. However, there are no signs yet of the trend reversing, writes Világgazdaság.
Construction at all-time low
Attila Juhász, President of Új Ház Építőanyag Nagykereskedelmi Plc., expressed concerns about the building materials market’s development this year. Despite maintaining home-building subsidies, the population is not undertaking new constructions due to increased credit costs. New single-family housing has been the hardest hit, with a 40 percent decline in orders.
According to data from New House (Új Ház), turnover declined by 22 percent in the first four months of the year. In May, this decrease was up to 24%. This indicates an accelerating pace of decline. In May alone, the year-on-year decline in value terms reached 32 percent, with sales volume dropping by 35 percent.
On the bright side, the ease of finding a contractor has improved, with average lead times halved. However, if order books remain low for an extended period, there is a risk of contractors migrating abroad. This, by fay, undermines the perceived benefits of the current situation for customers.
Although there have been some price reductions in certain product areas, construction material prices have stagnated overall. Furthermore, there are no prospects for significant price reductions in the medium to long term, according to Juhász. The market, which experienced significant overheating due to home renovation subsidies last year, is now facing a more widespread downturn than anticipated.
Without intervention, the expert projects a further decline in the building materials market, with serious challenges for the construction industry and the entire supply chain. Building materials factories may even face closure.
The lack of major investments is being felt, although the impact on building materials distributors is less severe than in the residential market. Failure to stimulate renovation and construction for an extended period will make it more costly and challenging to revive the sector. Additionally, the number of detached houses under construction is gradually halving compared to the previous year, further impacting the revenues of Hungarian building materials retailers.