Savills has been monitoring the prices of construction works and building materials for a long time. In 2021, we tracked an overall increase in these prices of up to 10% relative to 2020, and anticipate the same trend in 2022. Given the overall inflation rate of 3.8% in 2021 in the Czech Republic and an inflation estimate for 2022 of between 6 and 7%, it is evident that the increase of prices for building materials and works is aligning with the overall increase of prices and services in the market.

The price increases are particularly relevant for materials where the raw material is metal (steel and non-ferrous metals) and plastic granulate. The published price lists of producers and retailers have changed only slightly since autumn 2021, although more than usual for this period. Key to the price increases is that they are primarily due to a reduction in discounts provided, with the value of discounts being about half of what they were last year.

Raw material prices are still rising. We therefore recommend that, for new contracts, clients check the current prices of key materials directly with the supplier and, if necessary, allow a margin for further price increases.

The key commodities with the highest price increases include steel (33%), PP pipes, thermal insulation and aluminium (all 30%). These commodities have continued to show month-on-month price increases of around 3-5% in recent months.

At the same time, there are also commodities and products with a downward month-on-month price trend, such as OSB (25%), structural timber (13%) and coating insulation (5%).

Overall, it can be said that the fastest construction price increases are behind us, however, they will most likely follow projected inflation at least through 2022.

The price increase is driven by several factors such as covid production downtimes and increased demand not anticipated by the production facilities. The result is delays in lead times and construction generally being more expensive. However, prices are expected to stabilise but not to pre-covid levels.