Credai, the apex body of real estate developers, said on Thursday that the construction cost has increased by 10-20 per cent due to the sharp rise in the prices of steel and cement. Due to this situation, housing prices are likely to rise in the medium to long term. CREDAI Chairman Satish Magar said in a virtual press conference that due to the second wave of Kovid-19, there has been a sharp decline in the sale of houses since April.
He, however, did not provide any data on the decline in expected housing sales during April-June as compared to the previous quarter. CREDAI President Harsh Vardhan Patodia said, “There has been a huge increase in the prices of cement and steel during the last one year. Hence housing prices are likely to rise in the medium to long term. He said that developers are forced to increase the price as they are not in a position to absorb the increase in construction cost on their own. The association has written to the government many times regarding this to control the price of cement and steel. This has also been complained to the Competition Commission of India.
Second wave more devastating for real estate
According to CREDAI, 90 per cent of real estate developers believe that the second wave of Kovid-19 has been more ‘disastrous’ for their business than the first wave. According to a survey conducted by CREDAI, there has been a sharp decline in new residential sales and collections since April. Most developers fear delays in projects due to the lockdown in many states. Developers face challenges such as labor shortage, financial constraints, delays in approvals, escalating construction costs and weak customer demand.
India ranks 55th in terms of housing price hike
At the same time, India has been ranked 55th in terms of housing price growth globally during January-March 2021, according to a report by international property consultant Knight Frank. In the same period, the Gulf country Turkey has been at the first place with 32 percent price increase. Housing prices in India declined by 1.6 per cent during the January-March quarter this year as compared to the fourth quarter of 2020.
Knight Frank on Thursday released its ‘Global House Price Index – Q1 2021. It tracks the movement of housing prices in 56 countries and territories globally. Earlier, India was ranked 56th in the report released in March. Now India has moved up one place to 55th and is only ahead of Spain in the list of 56 countries around the world.