High construction cost hits home buyers, realtors
Vijay C Roy
Tribune News Service
Chandigarh, December 30
When Raman Singh (name changed), 41, bought a 10-marla plot in December last year, he never expected the cost of key construction materials would increase manifold. The continuous upsurge in the prices of cement, steel and sand has raised the construction cost and it has affected both homebuyers and developers alike.
Unprecedented increase
Coming to the price change in the past one year, the way raw material costs have increased, the prices of real estate should have also gone up, but this has not been the case. The developers are absorbing the cost for quite some time, but it is becoming increasingly difficult now
According to estimates, the price of cement has risen by over 20% and steel by over 40-60% since January last. In January, the price of steel was Rs 35,000-40,000 per tonne and it has skyrocketed to Rs 54,000-58,000 per tonne now.
“The hike puts undue pressure on the realty sector. The sector has been a victim of ‘being overpriced perception’ even though prices have remained subdued for years,” said Nagaraju Routhu, CEO, Hero Realty.
“If we compare the prices of 2019 and 2020, the cost of coarse sand has risen by almost 50% and cement by around 15%. The impact of raw material cost on real estate prices differs from state to state. In Mumbai, the raw material cost component is only about 15% and the land cost makes up for a larger part whereas in Punjab or other smaller cities, the land cost is minimal and raw material cost makes up for a considerable portion of the project cost,” said Prateek Mittal, executive director, Sushma Group.
If prices don’t stabilise, the real estate prices may go up in the short term.
