Expert Explains: What Will Happen to Building Material Prices This Year

According to Eero Rakaselg, purchasing director at Puumarket, the Baltic region's largest timber retailer, Estonia's construction materials market remains moderately favorable in the second half of 2025. Although general inflation has made production more expensive, this has not been reflected in prices to the same extent as, for example, food or energy prices.

According to Statistics Estonia, the construction price index rose 0.9% in the second quarter of this year compared to the first quarter, and 1.4% compared to the same period last year. "The price increase is primarily driven by labor cost growth, but material prices have moved upward only minimally," commented Rakaselg.

"Construction timber is still significantly cheaper than it was a couple of years ago – compared to the peak prices of 2022, the price decline is approximately 40–50%. This means that builders and private consumers currently have the opportunity to stock up affordably on both timber and other basic materials. It is also easier to find labor in the construction market than during the high boom period," said Rakaselg

"Demand in nearby markets – especially in Finland and Germany – remains weak, which keeps competition fierce and prices under control. Sweden is showing the first signs of recovery, which could affect the Estonian market in the longer term. The local construction sector is cautiously optimistic about the second half of the year, which is also reflected in moderate demand growth: for example, in May and June, construction timber purchases were approximately 10% higher than the previous year," explained Rakaselg.

"At the same time, it should be noted that the situation for plywood and sawmill industries is not easy – rising energy costs and labor expenses are putting pressure on profitability. These companies have been emphasizing for the second consecutive year that increasing sales margins is essential for survival, but end product prices remain low due to weak demand," said Rakaselg.

According to Puumarket's purchasing director, there is no reason to expect significant price increases in the third quarter of 2025. "Construction materials prices will likely remain favorable at least until the end of the year. This creates a good opportunity for those planning to build or renovate – both the price level and labor availability are currently favorable for builders," added Rakaselg.