Property prices to go up as construction costs soar 

Factors range from rise in raw material prices to Ukraine-Russia war

Buying a new property is going to get more expensive as builders and developers have decided to pass on the rise in construction costs to consumers.

Those in the real estate sector said factors such as the sluggish demand that the pandemic caused, in addition to costs of raw materials and the fuel prices, had all resulted in a 20% to 30% price rise, which home and property buyers will have to bear. 

Suresh Hari, chairman, CREDAI Bengaluru, told The Hindu construction cost has not just increased, it has “skyrocketed.”

“The last two years of the pandemic and the subsequent sluggishness in the market have not contributed to weakening material cost. The residential markets picking up and the slow increase in demand for commercial/office space since the easing of the pandemic has led to increased demand for material. Overall, we can say that the project cost increased by more than 30%, though some of the materials have gone up by 40%,” he said.

Cement and steel have seen the highest increase, but all other materials have also seen an increase in prices, he added.

“There are various reasons given by manufacturers and vendors, but ultimately the increase is not justifiable to this extent. Availability of sand is posing a further challenge. The industry has been absorbing the cost increase over a long period of time, and the end price to customers has almost remained stagnant for the last two to three years. An increase now is inevitable,” he said. 

Pranav Sharma, founder-director, Swarna Griha, explained the price rise further: “Construction cost has definitely increased in the last two-and-a-half years, and the surge depends on two factors: structural cost and finishing cost. Structural cost has gone up by 25% to 30% in the last two years, and the finishing cost has increased around 10% to 15% due to the continuous hike in fuel prices. The overall effect is around is around 20% - a net effect that has come in the cost of construction on the developer’s side.”