Uncontrolled prices of raw materials of property might lead to an increment of 10% to 15%. The CREDAI (Confederation of Real Estate Developers’ Association of India) has expressed its concern about the increasing price of steel and cement, stating that construction prices will bear the brunt. The authorities have also demanded that the government needs to take adequate measures to keep the raw material prices within limits. They also wanted the GST to be reduced if needed. CREDAI has observed that these costs have been rising since the start of 2020.
The association has also stated that property prices have directly increased by 10 % to 15% in the last 1.5 years due to lockdowns, delays in constructions, labour shortages and curfews. Given that RERA does not permit developers to increase the selling price in spite of an increment in construction cost, the issue needs to be addressed.
Ultimately, the pressure of escalating costs is impacting the real estate developers. Therefore, the authority has requested the ministries and authorities to address the price hike issue for raw materials at the earliest. It also stated that price escalation should be permitted by enabling a clause in the agreement between buyers and sellers. Moreover, the government may allow input tax credit for projects in the real estate industry or rationalize GST on different materials used as raw materials. Any of these measures are likely to cut down property costs soon. Otherwise, property prices in all the segments of the real estate sector will rise up significantly. This would, in turn, adversely affect the government’s plan to offer affordable homes to the citizens.
Of course, the matter is of significance considering the limited purchasing power of the residents. Moreover, developers also need to remain competitive in the industry with the least profit levels.
