Wages push up construction costs, materials fall/ Main pressure comes from labor, while the market remains active
Housing construction costs continued to rise in the second quarter of 2026, but the main pressure this time did not come from materials. INSTAT data shows that wage costs increased at the highest rate, while construction material prices decreased compared to a year ago.
According to INSTAT, the Housing Construction Expenditure Index reached 114.7, while on an annual basis it increased by 1.1%, the same growth rate as in the second quarter of 2025.
The strongest increase was recorded in wage costs, by 4.3%, followed by other costs by 3%, transportation by 1.5% and machinery by 1.2%. Meanwhile, material costs fell by 0.6%, while only construction materials were released by 0.9%.
Even compared to the first quarter of the year, costs increased by 0.3%. Even in this comparison, wages made the largest contribution, with an increase of 1.1%.
The cost increase comes at a time when projected activity in the sector remains high. In the second quarter, 460 permits for new buildings were approved, 30.7% more than a year earlier, while the projected construction area increased by 10.3%, to 307,127 square meters.
The majority of permits, 331 in total, pertain to residential construction, with an area of 183,202 square meters. However, the approximate value of approved projects, including engineering works, fell by 13.2%, to around 16 billion lek.
The data shows that, unlike periods when materials exerted the main pressure on costs, it is currently wages that are pushing the construction bill higher.
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