Buying a home has already become costlier; expect another 9-15% hike in realty prices this year

NEW DELHI: A combination of recovery demand and rising construction costs has resulted real estate prices move up like developers considered to protect their profits. India’s top 8 property markets all saw an increase in the average capital value of residential properties, shows data from Knight Frank India.
Cities all posted price-per-square-foot growth of up to 7% year-over-year in the quarter ended March. Prices rose the most in Bengaluru with 7% y/y, followed by Pune and Mumbai with 5% and 4% y/y respectively. The lowest price increase of 1% was witnessed in Hyderabad and Chennai.

Prices of key raw materials have increased by 20% to 70% in the last year. Cement and steel prices have increased by more than 20% annually since March 2022. These costs account for the majority of total construction costs.

This spike in costs comes at a time when developers have been under pressure due to concerns about debt and higher liquidity over the past few years. So far, developers have been cautious about bullishness as the market is recovering from the impact of COVID-19. However, they have begun to feel the pressure of rising costs and have begun rethinking their pricing strategy.
“With the rising cost of materials, investors will be forced to increase prices because construction materials account for about two-thirds of the total construction costs. Developers have been operating on low margins for the past few years. Rising costs will hit developers in the budget and mid-market segments relatively more as they already operate on lower margins. With wholesale price inflation (WPI) and material costs both increasing in double digits, construction costs could increase by 8-9% by December 2022”, said Ramesh Nair, Managing Director, India & Managing Director, Market Development said. , Asia, Colliers.
Real estate agency Credai-MCHI last week said housing prices could increase by 10-15% in April due to a sharp increase in construction costs of Rs 400-600 per square foot with rising inflation in commodities. such as steel, cement, and other commodities.
The developer’s agency has also approached the central government with proposals to prevent rising residential property prices for homebuyers amid rising input costs. These steps include considering supporting the industry by reducing stamp duty and GST, and also enabling input tax credits (ITCs) for developers.
“We will continue to dialogue with the relevant ministries and agencies to review our recommendations regarding the gradual reduction of steel exports, the input tax credits allowed under the GST scheme and the The tax savings option of section 80-IB will be extended to Dhaval Ajmera, CREDAI-MCHI secretary, said.
In Maharashtra alone, house price can increase more than 15% due to Cash register (RR) released by the state government last week. The calculated rates are ready to provide you with a standard format established by the authority of the area property rates to be followed.
The average calculated readiness rate (RR) in city areas effective April 1 increased by 8.8% – excluding Mumbai, where the increase was much lower – after being virtually unchanged. changed in the past four years.

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