The steep hike in the cost of materials like cement and steel has hit the construction industry hard. The cost will go up by about ₹500 per sq. ft., considering the increase in prices of all materials, according to P. Koteswara Rao, joint secretary, CREDAI-A.P., and K.S.R. Raju president, CREDAI-Visakhapatnam.
The industry has already suffered a lot due to the COVID-19 pandemic for nearly three years. The proposal of the State government to hike the registration charges would lead to a proportionate increase in the cost of land and thereby the construction cost, the CREDAI representatives told a media conference here on Saturday.
The unprecedented rise in material costs has a debilitating effect on the realty sector, which provides employment to thousands of families. Small and medium builders, who constitute a majority of the building community, have been facing problems due to the provisions in the Real Estate Regulatory Authority (RERA) and GST. Though RERA has been made online, procedural delays continue to delay clearance of applications, sometimes taking more than a year.
The CREDAI representatives say that these delays were leading to escalation of cost and this has to be borne by the builder as per the development agreement. Ultimately, the burden would fall on the buyer with the unit cost going up. They sought speeding up of the online process. They said that the price of cement has increased by 35 % and steel by about 58%. Similarly, the price of PVC pipes has gone up by 40% and electrical cables and tiles have gone up by 45% and 25% respectively.
‘Reduce lending rates’
They sought among other things reduction in the lending rates and bringing interest rates of construction finance on par with housing loans for individuals. The lending rate for builders was 11 to 14 % as against 6 to 7% for individual buyers. They sought reintroduction of input tax credit, rationalising GST and RERA provisions and reduction in stamp duty to enable the realty sector overcome its problems.
E. Ashok Kumar, honorary secretary, CREDAI-Visakhapatnam, was present.