en.Wedoany.com Reported - Energy price hikes triggered by the Middle East conflict have pushed up construction material costs, accelerating the rise in new housing costs in Portugal.

A communiqué released by the National Statistics Institute (INE) on July 8 shows that the year-on-year change rate of the New Housing Cost Index (ICCHN) in May was 6.9%, 0.9 percentage points higher than in April, marking the largest annual increase in nearly three years. The last time a similar magnitude of increase occurred was in early 2023.

The main reason for the accelerated rise in new housing costs is the persistently high labor costs, compounded by the rapid increase in material prices driven by the war. INE data shows that in May, construction material prices rose 6.4% year-on-year, contributing 3.4 percentage points to the annual change in the ICCHN; labor costs rose 7.5% year-on-year, contributing 3.5 percentage points, with labor shortages in the market keeping labor costs consistently high.

The construction materials with the greatest impact on overall price changes include asphalt and diesel, with increases of around 30%; bare copper wire, coated copper wire, and PVC pipes, with increases of around 25%. Only prefabricated concrete products saw a price decline.

On a month-on-month basis, new housing costs rose 1.1% in May, 0.3 percentage points higher than the previous month and 0.8 percentage points higher than in May 2025. Within the single month, material costs rose 1.3%, and labor costs rose 0.9%.