15% price build-up in housing sector over high raw material costs

New Delhi: Realtors' apex body Credai on Tuesday expressed concern over an increase in the rates of cement and steel during the past one year and said housing prices could rise 10-15 per cent if the prices of construction raw materials do not fall.

The industry body demanded that the government should take measures to control the prices and suggested reduction in GST for construction raw materials. The Confederation of Real Estate Developers' Association of India (Credai), which has over 13,000 member developers, pointed out that the prices of construction raw materials have been increasing consistently since January 2020.

Moreover, the association said the delays in construction caused by lockdowns, curfews and the shortage of labour resulted in a direct increase in construction cost anywhere between 10 per cent and 15 per cent in the past 18 months. "If the prices of a higher raw materials do not start decreasing in the immediate future, there is a high probability that the prices of residential properties will go up by 10-15 per cent to offset the increased cost of construction," Credai said in a statement. Harsh Vardhan Patodia, president, Credai National, said: "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." He said the developers might not be able to absorb escalating costs and will pass on the burden onto homebuyers.

Patodia urged the government and relevant ministries to address this issue and tackle the prices rise at the earliest. Credai suggested that the government can 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," it said. If these steps are not taken immediately, property prices across all segments will shoot up, directly hampering the affordable housing and housing for all missions of the government, Credai said.