Expensive Home Home – The Hindu

Many buyers are feeling the pinch as construction inflation makes their dream home more expensive

Many buyers are feeling the pinch as construction inflation makes their dream home more expensive

Bengaluru Ashutosh T., a technician, started building his dream house in December 2021 and is yet to complete the project. But in the meantime, he went over budget by more than 40% due to building material inflation.

“I have seen the rally in building material prices over the past six months. From the Russian-Ukrainian war, from the coal shortage to fuel prices, everything has been questioned. To add insult to insult even my EMIs have gone up considering that after four years the Reserve Bank of India raised repo rates in the first week of May,” he lamented.

This has been the experience of most homebuyers over the past six months. Even in the apartment sector, many builders would demand an addition in the range of ₹100 to ₹200 per square foot citing inflation.

“There have been complaints to the Real Estate Regulatory Authority (RERA) against builders for breaching agreements and demanding more money than previously expected. But builders usually already factor inflation into the deals,” said MS Shankar, general secretary of the Forum for the Collective Efforts of the People, which fights for homebuyers.

Suresh Hari, President of the Confederation of Real Estate Developers of India (CREDAI)-Bengaluru, said that on average, building material inflation and the labor market had indeed increased input costs in the building sector. about 30 to 40%.

“In most new projects, there has been a cost increase of at least 10%, with builders absorbing the rest of the increase. There has been a lot of stress on ongoing projects. Some builders are asking for a additional cost due to inflation, but home buyers are unlikely to pay due to contracts drawn up before,” he said, adding that the reduction in the indicative value by the government had relieved the sector.

The last five months have seen a recovery in most construction materials – cement, steel, sand and bricks – in the range of 13 to 63%. “The Russian-Ukrainian war would have disrupted the supply of certain raw materials for the cement industry. The shortage of coal in the country and the inflation of its prices have also had a negative impact on the cement and brick industries, for which coal is a prerequisite. There is also the cartelization which drives up the prices of cement. A 50 kilo bag that cost ₹340 in Dec-Jan, had spiked to ₹480 in March and has seen a correction again to ₹430 now. A single piece of table-mounted brick also went from ₹7 to ₹10,” said Khaleed Rehman, architect of the Center for Vernacular Architecture.

Another material to see a big price increase is steel. The cost of one ton has increased from ₹55,000 to ₹90,000.

“There is a serious lack of availability of skilled labor in the market, which has also driven up costs,” Hari said. “Many migrant workers, who returned to their hometowns during the pandemic, have not yet returned in force, which creates a shortage here. This has caused entrepreneurs to offer more wages to attract them, but even then there is a shortage. There is easily 15 to 20 percent inflation of labor wages in the market,” Mr. Rehman said.

CREDAI has now demanded government intervention to regulate the prices of building materials. “The industry has been slowly accelerating in pace and volumes over the past few months but is dogged by inflation. There is a need for the government to step in and regulate prices, at least an abuse of circumstances by the industry artificially increasing prices. price,” Mr. Hari said.

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