The Real Estate Information Center of the Government Housing Bank (REIC) has reported that the Standard House Construction Price Index for the first quarter of 2024 stands at 137.5, reflecting an increase of 2.3% compared to the same period last year (YoY) and a 2.2% increase compared to the fourth quarter of 2023 (QoQ). This indicates that the prices for standard house construction continue to rise steadily since the third quarter of 2023, albeit at a modest pace.

Dr. Vichai Viratakapan, Inspector of the Government Housing Bank and Acting Director of the Real Estate Information Center, stated that the factors contributing to the increase in the price index stem from rising compensation in the design and construction system categories, with the architectural work category seeing the highest increase of 4.7%. In contrast, the structural engineering category decreased by 2.5%, while the electrical and communication systems dropped by 1.9%, and the sanitation system saw a decrease of 0.3% compared to the same period last year (YoY).

Most construction material prices have decreased across nearly all categories, with steel and steel products experiencing the most significant drop of 9.2% compared to the same period last year (YoY). This decline is attributed to falling steel prices in Asian and Chinese markets, coupled with pressure from steel imports from China, which maintains high production levels while domestic demand in China has decreased. Consequently, China has been exporting steel to the ASEAN region and Thailand, leading to intense price competition as Thailand imports steel from China and other countries, resulting in an overall decrease in steel prices within Thailand.

Following this, the sanitary ware category saw a decrease of 8.9%, driven by a slowdown in demand for public construction projects during the 2024 annual budget period and a slowdown in real estate projects due to rising interest rates and stricter lending policies from financial institutions. Meanwhile, the prices of concrete products, tiles, electrical and plumbing equipment, and other construction materials fell between 1.0% and 5.2%, with only the wood and wood products category increasing by 7.2% compared to the same period last year (YoY).

Labor costs increased by 6.1% compared to the same period last year (YoY), due to the announcement of a minimum wage increase effective from January 7, 2024.

When analyzing the cost components of construction by category, we find:

  1. Design and Construction System Work
  • Structural Engineering saw a decrease in compensation rates of 2.5% compared to the same period last year (YoY), but an increase of 0.2% compared to the fourth quarter of 2023 (QoQ), accounting for 26.7% of the design and construction system category.
  • Architectural Work experienced an increase in compensation rates of 4.7% compared to the same period last year (YoY) and a 3.3% increase compared to the fourth quarter of 2023 (QoQ), comprising 67.2% of the design and construction system category.
  • Sanitation Systems saw a decrease in compensation rates of 0.3% compared to the same period last year (YoY) and remained stable at 0.0% compared to the fourth quarter of 2023 (QoQ), making up 2.7% of the design and construction system category.
  • Electrical and Communication Systems experienced a decrease in compensation rates of 1.9% compared to the same period last year (YoY) and a decrease of 0.8% compared to the fourth quarter of 2023 (QoQ), accounting for 3.4% of the design and construction system category.

2. Construction Materials Account for 59.1% of Standard House Construction Costs

  • Wood and Wood Products saw a price increase of 7.2% compared to the same period last year (YoY) and a 2.6% increase compared to the fourth quarter of 2023 (QoQ), accounting for 29.4% of the construction materials category.
  • Concrete Products experienced a price decrease of 5.2% compared to the same period last year (YoY) and a 4.9% decrease compared to the fourth quarter of 2023 (QoQ), making up 6.7% of the construction materials category.
  • Steel and Steel Products saw a price decrease of 9.2% compared to the same period last year (YoY) and a 0.6% decrease compared to the fourth quarter of 2023 (QoQ), accounting for 8.6% of the construction materials category.
  • Tiles experienced a price decrease of 1.8% compared to the same period last year (YoY) and a 2.4% decrease compared to the fourth quarter of 2023 (QoQ), making up 5.6% of the construction materials category.
  • Sanitary Ware saw a price decrease of 8.9% compared to the same period last year (YoY) but an increase of 2.3% compared to the fourth quarter of 2023 (QoQ), accounting for 3.0% of the construction materials category.
  • Electrical and Plumbing Equipment experienced a price decrease of 1.5% compared to the same period last year (YoY) and a 0.6% decrease compared to the fourth quarter of 2023 (QoQ), making up 6.0% of the construction materials category.
  • Other Construction Materials saw a price decrease of 1.0% compared to the same period last year (YoY) and a 0.2% decrease compared to the fourth quarter of 2023 (QoQ), accounting for 40.9% of the construction materials category.

3. Labor Accounts for 40.9% of Standard House Construction Costs

Labor costs have increased by 6.1% compared to the same period last year.

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Data Compilation Method

The Real Estate Information Center of the Government Housing Bank, in collaboration with the Home Builder Association, compiles the Standard House Construction Price Index quarterly, using 2010 as the base year.

This index is based on the "Happy Thai Family 5" house model from the Department of Public Works and Town & Country Planning, which is a two-story house with a usable area of 169 square meters, assuming a construction period of approximately 180 days. The construction cost includes operational costs and value-added tax but excludes land prices and land development expenses, such as land filling and leveling costs.

The categories of design and construction system work used to calculate the index include structural engineering, architectural work, sanitation systems, electrical and communication systems, and other works.

For the construction materials category, wholesale prices of construction materials in Bangkok from the Ministry of Commerce are used, while the labor category relies on minimum wage data from the Ministry of Labor for index compilation.

Precautions for Using the Data

The Standard House Construction Price Index is designed to measure changes in construction costs for houses built by contractors for individual clients, but it cannot be used to measure changes in construction costs for housing developments constructed by developers who hire contractors for multiple houses at once.

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Disclaimer

The statistical data and any writings contained in this report are sourced from reliable sources or processed from reliable data. The Real Estate Information Center has verified the information to a certain extent but cannot guarantee its accuracy or truthfulness and cannot be held liable for any damages arising from the use of this information. Users should exercise discretion and verify as appropriate.