The Mathematics Institute

In the last 15 years or so, the prices of real estate in cities have risen massively. High demand leads to high prices. As a result, rents have also gone up massively. Citizens and voters complain and put pressure on politicians to change this. Anyone who has ever understood the basic rules of the market economy knows what a person in power would do now. If there is a shortage of housing, then you have to create housing to relieve the pressure of demand. But this method does not work.

Why? Because the world economy has changed. All over the planet, the construction industry is booming. There is more building going on than ever before. And with it, the prices for building materials are rising. This makes the creation of new living space more expensive. This can be seen clearly in the development of timber prices. 

The development of timber prices over the last 10 years

Wood is used in many places in the building industry. In some parts of the world they use it for the building itself. Here, it is more concrete and cement. But it is used for soldier pile walls to stabilise the building pit. Here is the overview of the price development:

And here as a graph: 

But how did things come to develop the way they did?

Why are timber prices rising worldwide?

We already hinted at it, the construction industry is booming internationally. Therefore, wood is needed in higher quantities as a building material. But there are also other causes. 

One of them is climate change. In Germany, a dry summer led to the destruction of huge areas of forest. The last three years have been too warm and too dry. Huge stands have died and can no longer be used as timber.

Other countries have the same problem. Climate change is hitting them too and destroying wood stocks en masse. In California, there have been so many forest fires that some parts of the state are being considered for abandonment. But not only that. In the USA, many houses are built of wood. Every time a hurricane hits the country, many buildings are destroyed and have to be rebuilt. And with climate change, there are more and more natural disasters. 

Canada is one of the biggest suppliers of timber in the world. There have been devastating floods there in recent years. This has also caused numerous stocks to fail. In addition, there were problems in the supply chain. 

The trend thus continues unabatedly upwards. Some products are simply becoming more and more expensive and there is hardly anything that can be done about it.