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Rising construction costs increase home buying costs: CREDAI



Rising construction costs increase home buying costs: CREDAI

Credai, a real estate brokerage agency, said on Thursday that due to the sharp rise in cement and steel prices, construction costs have risen by 10% to 20%, so housing prices may rise in the medium and long term. At a virtual press conference, Credai Chairman Satish Magar stated that due to the impact of the second wave of the COVID-19 pandemic, home sales have fallen “precipitously” since April. However, he did not give the magnitude of the decline in home sales expected from April to June compared with the previous quarter.

In terms of housing prices, Credai President Harsh Vardhan Patodia said that cement and steel prices have risen sharply in the past year. “In the medium to long term, real estate prices are bound to rise,” he told reporters. Patodia said that developers will be forced to raise prices because they cannot absorb the rising cost of construction materials. Patodia said that it will not increase the price of existing customers, but the price of new sales may increase.

The association has written to the government several times to control steel and cement prices. It also filed a complaint with the fair trade regulator CCI (Competition Commission of India). In the presidential election of Credai, Boman Irani said that due to the sharp increase in cement and steel prices, construction costs have risen by about 15%. However, he said that rising property prices do not mean that developers’ profit margins will increase. “Our profits are being squeezed,” he said. Ilani said that the second wave of COVID’s impact on real estate is even more pronounced because everyone has been affected to some extent. He said: “The second wave came very fast, heavy, and hit home.” Chairman Credai said that the government needs to step in and announce measures to rescue this industry that is vital to overall economic growth.

He suggested that the government should allow the restructuring of developer loans and suspend loans to increase the liquidity of the industry. Last month, Credai stated that cement and steel prices have risen by 40% to 50% in the past few weeks and are suspected of price cartelization and unfair trade practices by manufacturers. The association has sent a letter to the Minister of Housing and Urban Affairs, Hardeep Singh Puri, seeking his intervention in the matter.

News Source : Financial Express

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