The increase in the price of raw materials pushes up the construction cost of buildings by Rs 500/square foot
A steep rise in the cost of nearly every element that goes into building a home seems to have shattered homebuyers’ dreams. The prices of raw materials, from cement to steel to electrical cables, have jumped by more than 50% in a short period of one year. Fuel prices and the cost of labor also increased considerably during the period.
Cement was available at a price of Rs 289 per bag (including 28% GST) in October 2020, but now it has risen to Rs 390 per bag (including 28% GST) in October 2021. The prices of the steel went from Rs 39,000 (excluding 18% GST) to Rs 56,900 per ton (excluding 18% GST). Fly ash bricks, sand, AAC blocks, electrical cables, laminates, GI pipes and other items have also seen commensurate increases over the past 12 or so months.
All these factors ultimately drove up the household cost by around Rs 500 per square foot. The average cost of a property which was around Rs 3,000 per square foot in October 2020, has now risen to a level of Rs 3,500 per square foot in October 2021. Some of the developers and builders in the city have also increased the prices of apartments and townhouses while many more are planning to do so in the coming days.
Gaurav Agarwala, secretary of CREDAI, Nagpur, said developers had no choice but to pass the burden of price increases onto customers. “However, some developers in the city have yet to raise prices because they completed most of the construction work before the cost of building materials skyrocketed. Customers have a golden opportunity to buy apartments and townhouses from these developers,” he said.
Another builder who wished not to be quoted said that except for the land cost of all other items, prices have risen sharply, which is sure to dig a deep hole in the pockets of buyers of houses. “Despite this, there is good demand for households which is likely to drive up property prices,” he added.