NEW DELHI: Owing to sustained increase in prices of raw materials, housing prices may increase by 10 -15%, warned realtors’ body Confederation of Real Estate Developers’ Association of India (Credai) on Tuesday.
“Historically, prices of almost all materials and commodities shoot up whenever there is a consistent increase in fuel price but the prices of construction raw materials have been increasing consistently since January 2020. Add to this the delays in construction caused by lockdowns, curfews, shortage of labour leading to increased labour cost leading to a direct increase in construction cost anywhere between 10% to 15% in the last 18 months,” said Credai which has over 13,000 member developers.
Harsh Vardhan Patodia, natioal president, Credai, said that the developers might not be able to absorb escalating costs and will pass on the burden onto homebuyers. “We have been consistently witnessing sharp increase in the raw material prices over the last one year and they don’t seem to be decreasing or stabilising in the near future... Credai urges the government and relevant ministries to address this issue and tackle the prices rise at the earliest,” added Patodia.
One way of addressing this issue, according to Credai, could be to permit escalation of prices by allowing a clause in the buyer-seller agreement. The government may also consider either allowing input tax credit for real estate projects and/or rationalisation of GST on various construction raw materials from their current rates as this would bring down the prices of residential properties immediately, it said. If these steps are not taken, property prices will shoot up directly hampering the affordable housing, it added.