The cost increase will not only impact the 2,773 projects which were approved by Municipal Corporation of Greater Mumbai (MCGM) in 2021 but projects comprising 260,000 units over the course of the next three years, it said.
Housing prices could go up by 10-15% in April due to sharp increase of Rs 400-600 per square feet in construction costs with rising inflation in key commodities like steel, cement, among others, real estate developers’ body Credai-MCHI said on Monday.
The cost increase will not only impact the 2,773 projects which were approved by Municipal Corporation of Greater Mumbai (MCGM) in 2021 but projects comprising 260,000 units over the course of the next three years, it said.
The developers’ body has also approached the state and central government with proposals aimed at arresting the rising price of residential real estate for homebuyers amidst rising input costs. These steps include considering giving relief to the industry by reducing stamp duty and GST rates, besides allowing input tax credit (ITC) to developers.
Speaking to reporters over a virtual conference call, Dhaval Ajmera, secretary, CREDAI-MCHI said, “Developers have absorbed this incremental cost for a long time now and will now look at passing it on to the homebuyers as they have no choice. We will continue to engage in dialogues with various ministries and concerned authorities to consider our recommendations regarding gradual reduction in steel exports, input tax credits being allowed under the GST scheme and the tax-saving option of section 80-IB to be extended to the affordable housing category.”
However, Ajmera denied claims of halting construction work in the state as of now but will consider if other ongoing measures do not provide necessary respite.
There has been a steep rise in prices of steel, cement, aluminum, PVC which have risen sharply between 30-100% during the last one year, resulting in more than 40% increase in raw material prices.
“As an impact of the war, rising cement and steel prices along with the rise in prices for fuel, have turned into one of the main points of concern. The rise in prices of pet coke, coal, and fuel costs, as well as freight rates, are all contributing to an increase in cement prices — one of the most integral raw materials for the real estate industry,” Ajmera said.
A recent report by CREDAI-MCHI drew insights based on the analytics drawn in the MMR Housing report, which foresees a 7-8% price rise over the next 12 months if the quarterly rise of 2% price hike continues into the current year. CREDAI forecasts that prices will rise much more in the coming quarter given the current disruptions in Russian and Ukrainian businesses as well as daily increment in fuel prices.