Rail Budget Pushes Up Cement Prices, Hits Housing Sector Hard

The gap between household incomes and rising property prices is widening by the day

Published: 02nd March 2015 06:00 AM  |   Last Updated: 02nd March 2015 06:00 AM   |  A+A-

VIJAYAWADA: The increase in the prices of cement and steel --  following the 2.7 per cent hike in freight charges for cement in the Railway Budget 2015-16 -- has come as a shocker to those constructing their dream houses and shattered the dreams of those wanting to have their own houses.

The rise in raw material costs has affected the housing sector badly. Builders and real estate dealers are in a dilemma as the demand for plots and houses has already dropped with the skyrocketing land prices after the bifurcation of the state and with no incentives  being announced for the housing sector in the Union Budget.

“In the realty sector, the increase in the prices of the raw materials has upset both the developers and the house buyers and the situation looks pretty disturbing. This will  adversely affect the buying power of the common man. In the past one year, the sales have already decreased to 50 per cent and only 5 to 10 per cent of middle class families are planning to buy a house,” explained PV Krishna, vice-president of Vijayawada Chapter of the Andhra Pradesh Real-Estate Development Authority (APREDA).

Other experts opine that though there will not be much fluctuations in the land prices in the next two years, there will be fluctuations in the raw material prices, resulting in escalation of constriction costs.

“In this scenario, how can a middle class person fulfil his/her dream of  having a own house? If the government has given any incentive to realty sector, then it would have been a different matter. But now the picture is different and the middle class people have to go 40-50 km far away from Vijayawada to own a house at affordable rate with all the basic facilities,” said APREDA state vice-president Ch Ramesh Babu

On the other hand, the demand for real estate among the rich has gone up by 20 per cent. Most of them are approaching banks for housing loans. “There is a great demand for housing loans among the higher income groups rather than middle class people these days. Though the former have money, most of them are approaching banks to avoid income-tax problems,” said N Uma Mahesh, a banking agent.

However, housing loans may have made buying a house easier but the difference between household incomes and rising property prices is widening with each passing day. Therefore, if a middle-class salaried person wants to take a house on loan, saving for the initial down-payment becomes a decisive factor.

“With the increase in  prices of all the basic commodities and real estate at the same time, how can a middle class person fulfil his dream of owning a house”, questioned P Sudhakar, a private employee from the city.

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