New Delhi: The Real Estate Developers Association of India (CREDAI) has expressed concern about the continued rise in prices of construction raw materials, including cement and steel.
Historically, the prices of almost all materials and commodities have risen whenever there has been a steady rise in fuel prices, but the prices of construction raw materials have risen since January 2020.
Add to this construction delays due to closures, curfews, and labor shortages, which has resulted in an increase in the cost of labor that has resulted in a direct increase in the cost of construction between 10% and 15% in the last 18 months.
The developers emphasize that this is a multifaceted problem, as RERA does not allow the flexibility to increase the sales price even if construction costs increase significantly. Last year, CREDAI wrote to various central government departments to express concern about the sharp increase in the price of materials, highlighting the problem on multiple platforms.
If higher commodity prices don’t start to fall in the near future, there is a good chance that residential real estate prices will rise 10-15% to offset the rising cost of construction.
Harsh Vardhan Patodia, President of CREDAI National, said: “We have seen a steep rise in commodity prices over the past year and they do not appear to be declining or stabilizing in the near future. Developers may not be able to absorb the rising costs and, unfortunately, may have shifted the burden to the buyer. Credit urges the government and the relevant ministries to address this problem and the price increase as soon as possible. “
CREDAI says that one way to address this problem could be to allow price escalation by allowing a clause in the seller-buyer agreement. The government may also consider allowing an input tax deduction for real estate projects and/or streamlining the GST on various raw building materials from their current rates, as this will reduce residential property prices immediately.
If these steps are not taken immediately, property prices in all sectors will rise significantly, directly hampering affordable housing and housing for all government functions.