Construction material price drop eases housing sector in Mozambique

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Construction material price drop eases housing sector in Mozambique

11:15 CAT | 27 Jun 2017

O País

Relief has arrived for those who stopped work because of the rising price of construction material.

A year has passed since Felisberto Cossa stopped investing in his dream of owning his own house. When in 2016 the national currency suffered massive devaluation against the dollar, which at the time cost only 80 meticais, Mr. Cossa was forced to stop construction.

A year later, as the economic situation of the country began to show signs of easing, the metical began to gain strength, and Cossa’s hope of continuing the work revived.

“I stopped work in 2016 because things were not easy, and construction materials were very expensive, but this year, with the fall in prices, I intend to continue the work. But I would like them to fall a bit more,” he said.

Construction material prices have dropped slightly in the last two months. Materials such as zinc sheets, reinforcing rods and cement fell in price in Maputo. Building cement has shown the greatest adjustment since 2016, when a 50 kg bag cost 450 meticais, causing many to stop work. It is now possible to buy cement for 330 meticais, with prices ranging up to 390 meticais.

Hardware warehouses and builders yards in Maputo are already feeling renewed customer support.

“Prices are going down, mainly of cement and iron, which are in high demand. Customers are already starting to come back,” hardware business owner Dionísio Chirindza says.

And it is not just building materials that are going down. Food in the Zimpeto Wholesale Market is also manifesting a drop in prices.

Real estate crisis has affected prices

Economist and university professor Faizal Karsane says that the increasing appreciation of the metical and the crisis in the real estate market are the factors that are dictating the fall in prices of construction materials.

The fall in the exchange rate observed at the end of last year had a great impact on the national economy, especially in the construction sector. “If we buy these building materials because of the exchange rate variation, it is obvious that if the exchange rate falls slightly in the last six months, the cost of imports decreases,” he says.

Karsane says that the crisis in the real estate market is a factor in the fall in prices, driven by the poor purchase of real estate in the last two years. The pace of construction in the country in the past years suffered due to devaluation of the metical against the dollar.

Source: O País