Recurring Hike in the Price of Raw Materials Set to Make Adverse Repercussions both on Developers and Customers

Cement, Bricks and Steel Price Hike to Have Punitive Impacts on Realty Sector

March 16: With an all-time price hike in steel, cement and bricks including other miscellaneous materials soaring significantly at an unexpected pace, the overall cost of construction is seeing a surge of almost 40 per cent. Such a steep rise in the raw materials will eventually up the ante on the price of all forms of real estate. Consequently, customers are supposed to be bearing the cost due to prices going forward at an extraordinary scale.

What’s more, the rising prices of building materials have succumbed the realty companies’ profit margin to the pressure. This can lead to a challenging time for project development as well as compelling realtors to increase price thereby putting customers in a tight corner.  No doubt, builders are concerned about their prospects too, as they might have to shoulder an extra Rs. 5 to Rs.10 lakh per unit whenever the price hike to be bourne by them with regards to RERA rules.

According to an industry expert, Mr. Gangan Goswami, Managing Director of Heritage Infraspace (india) Pvt. Ltd who has been leading the foundation works for 27 years like diaphragm wall works, piling works and civil construction among others, construction materials such as electric cables, PVC pipes, sand, steel, cement, bricks etc. have gone up between 20% to 40%. Add to more, depending upon the brand, the rates of these materials do differ. A bag of cement which was sold between Rs. 270 to Rs. 290 has shot up to roughly about Rs. 350. Steel prices have also seen extraordinary rise from Rs. 45000 per ton to eye-wateringly Rs.75000. On top of this, rising fuel prices have added fuel to the fire resulting in an increased cost of transportation. This will directly hit the developers while leaving a profound price-related impact on the customers.
He further added, “We have been witnessing a consistently sharp increase in the raw materials’ cost over the last one year and unfortunately, it does not seem to get stable. The price hike of cement, steel and bricks including other materials will certainly force the construction industry to increase approximately Rs.1000 or more for buildings which will adversely affect the customers. Hopefully, we expect CREDAI or other industry bodies to deliberate over the input cost of project development and request the concerned authority to come up with a mutually-feasible solution.”

With such a hike in price, the new projects shall definitely see enhanced prices whereas the launched -projects might decide on the price segment within a year. Needless to say, the realty sector has strong connections with the core sectors of the economy. Any fluctuation in the realty sector makes severe repercussions on more than many sectors including financial sectors. In such a scenario, the cost of raw materials ought to remain on a par with the comprehensive revival of real estate activities.


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