Major Determinants of Prices Increase of Building Materials on Ghanaian Construction Market

Humphrey Danso,Nana Kwame Obeng-Ahenkora

doi:10.4236/ojce.2018.82012

Abstract

Prices increase of building materials is a common trend in both developed and developing countries. The prices increase of building materials results in high cost of housing.The aim of this study is to identify the major determinants of prices increase of building materials on Ghanaian construction market, and also to assess the relationship between the independent variables of the prices increase. A five-point Likert scale was used for the study; from strongly disagree (1) to strongly agree (5). The variables in the questionnaire were ranked based on the response of the participants of the study using Mean Response Analysis (MRA) statistics. Spearman correlation matrix was used to determine the relationship between the variables of prices increase of building materials. Crude oil prices, energy cost, local taxes and charges, cost of fuel and power supply, high running cost, high prices of raw materials, cost of transportation and the high cost of labour were found to be the major determinants of prices increase of building materials on Ghanaian construction market. The study further found multicollinearity relationship among variables of prices increase of building materials, of which the highest correlation coefficient was found between fast-growing demand due to high global economic growth and over-dependence on imported building materials. The study recommends that further research should be carried out to determine the control measures of increase prices of building materials in Ghana.

Highlights

IntroductionBuilding materials are basic construction products such as cement, bricks, concrete, and aggregates, i.e. sand, rock, and gravel [2]
The prices increase of building materials results in high cost of housing.The aim of this study is to identify the major determinants of prices increase of building materials on Ghanaian construction market, and to assess the relationship between the independent variables of the prices increase
The study further found multicollinearity relationship among variables of prices increase of building materials, of which the highest correlation coefficient was found between fast-growing demand due to high global economic growth and over-dependence on imported building materials

Summary

Introduction

Building materials are basic construction products such as cement, bricks, concrete, and aggregates, i.e. sand, rock, and gravel [2]. Prices increase of building materials has become a common global trend, and even the developed countries are not left out. A number of developed countries are in recent times experiencing the problem with prices increase of building materials. Slowey [4] noted that the numbers from the Bureau of Labour Statistics US revealed a 4.8% rise in building material prices between February 2016 and February 2017. Building materials cost fluctuate on a daily basis, but the overall trend in recent time has been up [5]

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