House Prices Have Increased In 20%

Monday, May 06 2013 @ 11:22 am EDT

Contributed by: Anonymous

Those looking for a house today will have to face the new reality, a smaller and more expensive home. The price of a house or an apartment, within the middle class, has increased by 20% over the past eight years.

There are several factors currently affecting the rising cost of houses. Within the total cost of a home, the price of materials is the most influential in this price scale.

According to figures from the Authority for Consumer Protection (Acodeco), in 2009 you could buy a block of 4 inches at $0.79, but today its value is $0.92, representing an increase of 16.4% over the past four years.

On the other hand, 6-inch blocks, used to build foundations in constructions, cost $0.89 in 2009, and nowadays its price in the market is $0.99.

This represents an increase in 11.2%, comparing 2009 with 2013.

This is why the cost of materials is directly related to the constant changes in prices for acquiring a house or an apartment.

The president of the Panamanian Chamber of Construction, Enrique Asensio, said in the past six months, the price of those houses valued over $150,000 has gone up less than 4%.

The cost per square meter of apartments in San Francisco, Betania and Carrasquilla is between 1,300 to 1,500 dollars, and in the last two years there has been an increase, but less than 10%, said Asensio.

However, the manager of CAPAC believes the cost of construction materials has affected the increase in home values, and states that one of the reasons is the increasing supply and demand of them.

The same dynamics of the industry and the good performance of the economy have contributed to this rise, said the experts in this topic.

One example, said Asensio, is the demand for cement currently experienced by the country.

For this reason, cement companies have increased the cost of this material. In 2009, the price of a cement bag of 94 pounds ranged between $7.95 and $8.02, and then in 2010, it dropped to $7.25, in 2011 it went up to $7.85, and it continued increasing by 2012, until it reached $8.65.

Today, a bag of cement costs between $8.95 and $9.15, which results in an increase of approximately 15% in the last four years.

The architect Josť Batista, advisor of the Board of Directors of the Panamanian Society of Engineers and Architects (SPIA), attributes this type of increase to the inflation experienced by the country.

"Before, we had no clue what inflation was in Panama, and now we are experiencing a marked inflation of 6%", said Batista.

For the architect, there are increases of up to 50% in some areas.

Meanwhile, Victor Aguilar, an architect who has been involved in several construction projects, said that between the years 2005 and 2009 there was an average increase in the price of materials, of about 7%, and between 2009 and 2013, the increase was approximately 13%.

For the expert, the most significant increases have been recorded in recent years.

According to data from the Acodeco, the 30-foot section of the steel bar of half an inch in diameter, another important material in construction projects, costs between $5.65 and $6.70 in 2009.

Currently, it costs between $7.80 and $8.48. The increase in price of this material represents a 26%.

On the other hand, the 30-foot section of the steel bar of three-eighths in diameter, which is used a ring for steel beams and columns, cost $3.88 in 2009, and now it has a value of $4.81.

During the last years, this material has had an increase of approximately 23%.

The department of information and verification of prices from the Acodeco also refers to the value of the foot of galvanized zinc.

In contrast, this materialís price has decreased in 1.3%. In 2009, the value of zinc was $2.28 per foot, and by March of this year it cost $2.25.

For the economist Victor Cruz, the prices of imported materials are difficult to control because their behavior obeys exogenous factors.

The rise in prices of locally produced materials is due to the level of economic growth of the country, said the specialist.

According to other experts on the subject, the cost of housing is not only affected by the price of materials.

This is the case with Andres Quintero, a construction worker, who said the high cost of materials is not the only factor affecting the prices of houses.

Some experts say the increase in labor and land costs also influenced the value of homes.

For economists, one must also take into account the price of fuel and transportations, which influences not only the cost of materials of construction, but also any other product or service.

This increase may reflect more on imported goods, as the economy of many industrialized countries is going through a bad time.

For this reason we are looking for alternatives to lower costs, like using new building systems.(Panama America)

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