Demand among middle and upper middle classes badly hit
NEW DELHI: The rising steel and cement prices during the past few months coupled with the global hike in the prices of metals has come as a “rude shock” to those constructing their “dream houses,” more so to those who dreamt of a house of their own.
The rise in input costs for the housing and real estate sectors has led to a massive escalation badly hitting the demand among the middle and upper middle classes. The situation has become worse for the lower strata of society.
The real estate market is in a tizzy with the demand for housing witnessing a sudden drop and the developers are in a dilemma over whether to revise property prices or wait for things to stabilise.
Vineet Manchanda, Managing Director of the Delhi-based Manchanda and Manchanda Builders, said the rising inflationary trend resulted in prices going up for all commodities.
This has adversely affected the buying power of the common man.
“In the field of real estate, the increase in the prices of the raw materials has impacted both the developers and the real users and the situation looks pretty disturbing,” he added.
Steel and cement
Mr. Manchanda, who is developing the Eden Gardens Residental Complex at Riwari in Haryana and also runs an ITC-Heritage run Solang Valley Resorts in Manali, said the increase in steel prices had been 50 per cent from Rs. 30,000 to 45,000 a tonne during the last few months. The increase in cement cost had been from Rs. 195 to Rs. 220 a bag, an increase of about 15 per cent.
Other housing sector players also talk on the same lines pleading that the cost of copper and aluminium has gone up by almost 50 per cent and the construction manpower cost has gone up by 40 per cent. The cost of general material inputs has gone up by 25 per cent, resulting in the cost of construction going up from Rs.900 to 1,300 per sq feet.
A majority of the real estate developers said the demand for housing had dipped by 30-40 per cent due to sale prices going up, though it may vary from region to region. The cost of construction in an A class city has increased from Rs. 400 to Rs. 500 per sq feet and in B Class cities it has risen from Rs. 350 to Rs. 400 per sq feet.
“Overall impact bad”
“As steel is a major raw material for the housing sector, the overall impact has been very bad. It has led to a 40 per cent increase in costs. We have no option but to hike the cost of our apartments meant for various segments,” said Mukesh Aggarwal of Paramount Group developing the Crossing Republic Mall and Paramount Tulip Residential Apartments in Delhi and the National Capital Region (NCR).
Anil Jain of Nitishree Infrastructure, developing residential and commercial property in the upcoming hi-profile Greater Noida region and also other parts of NCR, said the economics of construction had gone haywire.
“Not at good sign”
“Everything from sanitary, railings, doors, windows and other material has gone up by between 25 and 30 per cent. This is not a good sign for the development of the industry. As if the high rate of interest was not enough, the latest price escalation has led to erosion in the buying power of the people. Owning a house has become virtually impossible for a large section of the population. We will have no option but to pass on the increased cost to the consumers in all our new projects,” he said.