Eamets: Construction sector price increases supported by general economic recovery and more accessible loan money

Today, the statistics office released data on the construction price index for the third quarter. This shows how much prices have increased across different cost items, particularly how much materials, machinery use, and labor have become more expensive. Overall, construction prices rose 1.7% in the third quarter (year-on-year).

Materials became more expensive (2%), while labor cost growth was 1.2%. When comparing month-on-month, we see that in September labor cost growth was 0.9%, whereas in June labor costs rose 2.5%. This is also expected, as construction activity in early summer is more intense and labor demand is greater. Yesterday's published producer price index statistics also support the data described above, as we saw that the producer price index for the timber industry had risen 5.2% in September compared to a year ago. Wood is, as is well known, one of the most important construction materials.

The construction sector's price increase is supported by general economic recovery and more accessible lending, as interest rates have fallen significantly compared to a year ago. All of this, in turn, eventually transfers to real estate price increases as well. It can be assumed that a similar trend will continue in the near future.