Whether we are talking about wood, paint, or concrete, the cost of almost all the materials that go into building a house has skyrocketed.
This turns out to create problems for both homeowners and business owners around the world. I will use Norway as an example, for simplicity, but much of what’s true for Norway is also true for the US and Europe: a record number of people are building new homes, which has led to a combination of supply and demand that quadruples the prices of building materials in some places.
Individuals Have to Dig Deep in Their Pockets
One of the passions that have grown big among Norwegians in the last couple of years is the construction of terraces. Many people have had more time as a result of the pandemic – time many people spend on taking their outdoor home life to the next level. Keeping a nice and tidy outdoor area is also an important duty for landlords, something that has now become more challenging.
During the last year, prices for wooden materials have risen sharply. According to Paal Erichsen, purchasing director in the building materials chain Optimera, the 50 percent price increase for terrace material will only continue to rise if the situation does not change.
Individuals are struggling with the rising costs, but so are companies.
Contractors Are Forced to Increase Prices
The Norwegian internet magazine e24 writes that the general price of lumber has risen by about 50 percent during 2020. In addition, a further price increase of about 25 percent is predicted to happen. This means that it will cost up to $20,000 more to build a new house, simply because of the increased cost of building materials.
Construction companies must therefore increase the prices of their services, which creates challenges for many contractors. Vest Norsk Bygg, for example, is one of the most used home building companies in Bergen, and must, like everyone else, increase prices in order for them to have any profit.
Since many people request the services of Byggmester Bergen to build new houses, this becomes problematic for some of their customers, who choose to wait and see if prices go down again. Most of them understand the situation, however, and are happy to go through with their projects right away. General manager Harald Haarvik has seen price changes like this before and is confident that the company and its customers will get through this tough period also.
An International Phenomenon
It is not only in Norway that more expensive building materials create problems. In both the US and other countries in Europe, a lot of homes are being built at the moment. Timber prices in the US have rarely been higher, and have risen by 300-400 percent in the last year. One can only imagine what this does to housing costs when Norwegian individuals and companies are struggling with a price change of only up to 75 percent.