Real estate companies may increase house prices by 10 to 15 per cent from next month due to increase in the prices of raw materials like steel and cement. Realty companies’ body CREDAI said on Monday that the cost of construction has increased by 20-25 percent in the last about 45 days. At the same time, real estate organization Naredco has also said that in view of the increase in the cost of expenditure, both the buyers and the real estate companies may face difficulties.
CREDAI’s Maharashtra unit CREDAI-MCHI meanwhile urged the central and state governments to consider giving relief to the industry by reducing stamp duty and GST (goods and services tax) rates, besides allowing input tax credit (ITC) to developers. has demanded. The body said, the sudden and sharp increase in cost has reduced the margins of realty projects and made them impractical. The real estate organization says that the cost has gone up by about Rs 500 per square foot. The cost of some items has increased by more than 100 percent in the last two years.
Won’t stop construction work for now: CREDAI
CREDAI said it would not advise its members to stop construction work for now. However, if the price hike continues, realty companies will have no other option but to stall projects and postpone raw material purchases. CREDAI-NCR had recently said that it is looking to stop construction work and purchase of raw materials.
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Challenges will also increase for consumers: Naredco
Praveen Jain, chairman of real estate organization NAREDCO, says that the real estate sector has been facing challenges for the past several years, but the Corona crisis has increased the difficulties for both real estate companies and consumers. Jain said that the sector seemed to be on track due to reduction in interest rates, incentives from the government and affordable offers by real estate companies, but on the one hand the construction cost is increasing rapidly and in the next few months, the rates from the Reserve Bank are increasing. In view of the increasing apprehension deepening, buyers may once again be hesitant. Jain says that not only new houses but also incomplete projects which are running from time to time should be allowed to increase the price up to a limit.
Buyers want discount in prices: Survey
Nearly half of the people planning to buy a home believe that the prices of residential units may increase in the next six months due to rising construction cost. Along with this, 73 per cent people also want discounts on home purchases and flexible payment plans. This trend has come to light in a joint survey by housing portal Housing.com and real estate organization NAREDCO. The survey is based on feedback from over 3,000 people in the first quarter of 2022. Housing.com in its January-June 2022 housing consumer sentiment outlook report released on Monday said 47 per cent of the people surveyed want to invest in real estate rather than other investment avenues like equity, gold and fixed deposits. In the second half of the year 2020, this ratio was only 35 percent.
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According to the survey, 51 per cent people feel that the prices of houses may increase in the coming six months. At the same time, 73 per cent are expecting price discounts and flexible payment plans to carry out their home purchase plan. The report suggested that the government should increase the tax exemption on interest rates on housing loans and cut GST rates on construction materials. Apart from this, arrangements should also be made to provide easy loans to small developers.