Apartment prices are growing due to rising construction costs
Apartment prices are growing due to rising construction costs, say developers. The price of new apartments, €1,218 per sqm at the end of 2014, has risen by €160 since then. Developer YIT received bids 15% higher from construction firms for the second phase of its Nuppu residential project compared to the first phase, despite just a six-month time difference. Developer Cresco reports a 25% increase in construction costs this year, and Lucron, 17%. The price growth mainly reflects labor shortages. Developers see no price bubble on the residential market, as rising prices reflect rising costs rather than growing demand. For 2018, they expect apartment price growth to slow down, following the central bank NBS measures curbing the mortgage provision. They see the real estate bubble inflating possibly in 3-4 years.
