Building material costs soar by historic margins in Luxembourg
The cost of building homes, offices and other projects in Luxembourg climbed by the fastest pace in almost three decades over the six months ending in April, the country's statistics agency said in documenting the local effect from a worldwide surge in prices for scarce building material.
Construction prices increased by 4.3% between October 2020 and April 2021 in Luxembourg, Statec said on Wednesday in its semi-annual survey of the building industry. That was the strongest six-month surge since April 1992 and was mainly due to soaring material costs, the statistics agency said.
The soaring price of wood needed to frame buildings meant that contractors paid 14% more in April than October, roofing materials climbed 7%, and rising prices for iron and various plastics all added to the sudden climb, Statec said.
A global supply shortage, mainly due to high demand from the USA and China, whose economies have bounced back from the initial impact of the pandemic, have caused the cost of various materials such as wood, steel, metal, cement and glass to soar, two government ministers said last month.
"It is currently unforeseeable whether the sudden spike in construction material costs is a short or medium term phenomenon," Housing Minister Henri Kox and Minister for Small and Medium-Sized Enterprises Lex Delles wrote in response to parliament members.
“Some materials have more than doubled in price,” Roland Kuhn, chief executive of construction firm Kuhn, said last month. “This represents several thousands of euros.”
While Kuhn said he had enough stock to last for several weeks, some companies have stopped working.
“We are all worried that if things don’t change, we will have to stop projects and send workers home,” Kuhn added.
The construction sector was hit hard last year when the coronavirus started spreading in Luxembourg, when all building sites were forced into a standstill for more than a month. The government is now again allowing the building sector to put workers on furlough to help businesses stay afloat, promising to pay builders more quickly, and extend deadlines to complete construction on public projects for companies unable to access needed material.
Some public buildings at risk of not being completed due to the shortage include the future international school in Mersch, the European Commission’s new building in Kirchberg and the country's new prison.
Housing in Luxembourg is already unaffordable for many people working in the country, and the staggering 17% price increase last year has pushed many over the border in search for more affordable living in France, Germany or Belgium.
The average price for a house in the capital is now €1.35 million and shelter costs 70% more in Luxembourg than the EU average.