In recent times, and particularly over the past year, soaring property prices and rising mortgage rates have made buying a home increasingly difficult. But is inflation the only cause? Or have construction costs genuinely risen in parallel?
Let us begin by examining how the key cost components of construction have changed. Steel and concrete together account for approximately 20% of total construction costs. Taking these two principal materials first: steel, which cost 12,000 TL per tonne last year, now stands at around 14,000 TL, an increase of approximately 15%. Concrete, on the other hand, has risen from 300 TL per cubic metre last year to 1,350 TL today, a staggering increase of 450%. The rise in concrete prices, in particular, has been extraordinary.
So what is driving this increase within the concrete supply chain? Concrete is produced by homogeneously mixing water, cement, aggregate, and chemical admixtures. Aggregate is the collective term for sand, gravel, or crushed stone. Starting with cement: a bag that cost 35 TL last year now costs 90 TL, an increase of 250%. Sand has risen from 155 TL per cubic metre to 260 TL, an increase of 70%. Gravel, being naturally occurring, is primarily affected by the cost of the fuel used to crush it. Diesel fuel has risen from 12 TL per litre last year to 24 TL today, an increase of 100%.
Now consider this: concrete prices have risen by 450% year on year, yet the single most significant input within concrete, cement, has risen by no more than 250%. Does that not suggest that something does not add up?
- Cement: 250% increase
- Sand: 70% increase
- Aggregate: 100% increase
If a contractor built a 100 square metre flat at a given cost last year, that same flat now costs three times as much to build. Property sale prices have risen in parallel. The increases themselves may appear to have some basis, but there is one specific issue that has become genuinely critical and demands proper scrutiny and intervention.