Unit prices of self-built homes could increase by at least 8.2% if the minimum wage is increased to 300 baht a day as the new government has pledged, builders say.
A higher minimum wage would have twin impacts on the cost of constructing a house, said Vibul Chantradilokrat, president of the Home Builder Association (HBA). One would be an increase in labour costs, which account for 30% of the total, and the other on construction materials, the major cost at 70%.
Raising the minimum wage from 215 baht to 300 baht a day, or by 39.5%, would lift home prices in a range of 8.2% to 10.6%.
"We cannot estimate how much construction materials prices will rise, but they will definitely increase as the wages for production of construction materials will be revised up in line with the new government's policy," said Mr Vibul.
He said the higher unit prices were, the higher the increase in prices would be. Finished materials are used more to build smaller units than larger ones. Higher-priced units are mostly built by skilled labour.
"Homebuilders should carefully set unit prices as the new wage, if passed, will start on Jan 1 next year," said Mr Vibul. "Unit prices introduced today should factor in new rates, as a unit sold today will start construction no later than November and finish next year."
In labour costs for a self-built home, wages ranged from 215 baht to more than 300 baht a day for non-skilled and skilled labour. An increase in the minimum wage of 215 baht would cause a step-up increase in other wage rates. For example, from 215 to 300 baht, 250 to 320 baht and 275 to 325 baht.
From Aug 25-28, the HBA will hold its Home Builder 2011 event at the Queen Sirikit National Convention Center, where more than 40 builders will join with a sales target of 2.5 billion baht, up from 2.3 billion last year.
Highlights will include the 4G Home concept of good design, good consultation with architects and engineers, good content from landscape and interior architects, and good land profile.
Financial partners Siam Commercial Bank, Kasikornbank, the Government Housing Bank and Bangkok Asset Management Corporation will offer more than 1,000 plots of land with titles for building houses.
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