A significant price hike in Bermuda’s building supplies could dampen the availability of new properties, a leading realtor said in the wake of revelations this week of soaring building costs.

The Royal Gazette reported dramatic increases in costs for concrete and block by the island’s top supplier, SAL Trading, effective January 1. SAL advised its industry clients that the price of 3,000 psi concrete has increased from $278 per cubic yard to $406, an increase of 46 per cent.

Meanwhile, the price of 8in concrete block has increased from $3.40 to $5.11 per block, up 50 per cent, and the cost of 10in block has risen from $3.78 to $5.68, also a jump of 50 per cent.

The extra cost was attributed to the loss of a key local supply of aggregate, which is added to concrete to strengthen it.

The Wilkinson Quarry in Hamilton Parish, where extra-hard Walsingham limestone is mined, has been depleted after decades of supplying building material — causing the cost to rise as suppliers turn to imported aggregate.

Susan Thompson, agency manager for Coldwell Banker Bermuda Realty, said: “This will affect the whole community.

“The reality is the community as a whole is experiencing extremely low levels of inventory.

“This will definitely impact any new inventory in terms of new builds. Obviously it’s going to affect renovations where you may need block or cement.

“Right now we’re experiencing shortages in rentals and sales. We were hoping perhaps people would be building — and, if so, we would have new inventory.”

John Sinclair, director and managing broker for Sinclair Realty of Christie’s International Real Estate, said the island could always bank on its construction record.

But even deep-pocketed buyers of luxury real estate would feel the pinch.

“Our high and ultra-high-net-worth clients are not immune to the recent increases in construction costs,” Mr Sinclair said. “No one likes to pay more, no matter how wealthy you are.”

He added: “But then again Bermuda has never been the least-expensive jurisdiction in which to reside.

“One of the reasons why international purchasers of luxury homes select Bermuda over other islands and US coastal communities is the overall excellence of construction and craftsmanship here.

“The quality of our homes is the bedrock of quality of life in Bermuda.”

The Royal Gazette sent questions last Thursday to the ministries of Public Works as well as Economy and Labour about the implications of higher construction and material costs on plans for economic recovery, infrastructure and boosting the island’s affordable housing.

A government spokesman said last night that the construction industry is vital for the island’s economy, and any potential threats to employment were of “significant concern”.

“Jason Hayward, the Minister of Economy and Labour, will have an open and candid conversation with the industry stakeholders, employers, suppliers and others in the supply chain so that we can understand the challenges and draw out an actionable plan,” the spokesman said.

"Concerning affordable housing in general and the residential building programme in particular, the majority consists of refurbishing units that are not in use.

"A smaller percentage of the work will need concrete blocks and cement. If interior walls are required, we are looking at other materials which will give the same quality but at better pricing.

"The increase in the price of concrete is expected to impact our new development and refurbishment projects considerably. However, the Government intends to continue with its plans."

The Gazette also queried whether the island was looking for alternative overseas suppliers to rein in costs — and asked Public Works if alternative quarry sites for aggregate were being sought on the island.

Craig Cannonier, the Shadow Minister of Works and Engineering, said the increase in the cost of concrete blocks and cement was “extremely troubling”.

“Industry stakeholders are telling us this cost hike will have a significant impact on projects, both in the private and public sector,” he said. “Whether it's large capital projects such as the Fairmont Southampton and the Grand Atlantic, or residential projects, difficulties will be met.

“Large and small contractors and retailers of block and cement will be faced with having to make major adjustments and decisions — decisions that could lead to lay-offs. That's not good news at all.”

Mr Cannonier said an “environment of competitiveness” should be built to help to reduce costs, and reducing foreign currency tax could help to reduce costs by limiting taxes on imported goods.

“All efforts must be made to reduce further price increases as many are struggling to remain afloat in these tough financial times,” he added.

“We are living in an extremely stressful time. Higher costs will result in unfavourable decisions having to be taken. More bad news doesn't help.”