US costs to rise by a fifth

The price hikes will be felt over both the short and long term, and most keenly in residential construction, according to a report from Davis Langdon.

The report said residential construction costs would go up in the Gulf Coast region by 10-15% and nationally by 5-10% in the next two years.

Non-residential construction costs would increase by 5-10% locally and less than 5% nationally.

The most significant impact of the disaster in terms of the US construction economy will be on the availability of contractors and labourers.

The report said even now bid prices are up 10-20% in some areas, spurred by strong demand for workers and by contractors’ wariness of taking on risk.

Labour, already in short supply before the emergency, will be even tougher to find, Davis Langdon warned, due to the increased workload and because the Gulf Coast has a reputation for being one of the lowest-paying areas for construction workers.

Materials will also come under pressure. The report predicted an overall rise in the cost of key materials such as wood, gypsum board and concrete of 10-20%.

Panic buying of materials such as wood and steel is adding further to price volatility.

The cost of some materials was up 30% as result, and this is expected to last into early next year.

Forest products will suffer from both high demand and depleted stocks in the local tree-growing areas of Louisiana, Mississippi and Alabama, which were devastated by the storm.

Local timber prices will leap by 20% in the short term, according to Davis Langdon’s report, Impact of Katrina on the Construction Market, written by Peter Morris.