Realtors’ body CREDAI on Monday said the cost of construction has gone up by 20-25 per cent, mainly during the last 45 days, due to steep rise in prices of raw materials like steel, and builders will be forced to increase property prices from next month by an average 10-15 per cent.

CREDAI-MCHI, the Maharashtra chapter of CREDAI, demanded that the central as well as state governments consider giving relief to the industry by reducing stamp duty and GST rates, besides allowing input tax credit (ITC) to developers.

The association said it would not advise member developers to stop construction works as of now, but if the price rise continues then builders would have no option but to halt works at project sites and defer purchase of raw materials.

Recently, CREDAI-NCR had issued a statement that it was considering stopping construction works and also halt purchase of raw materials. “Steel prices have gone up from Rs 35-40 per kg to Rs 85-90 per kg. Cement prices have gone up by around Rs 100 per bag. Fuel and transportation costs have gone up. This has resulted in an increase of 20-25 per cent in the overall construction cost,” CREDAI-MCHI President Deepak Goradia told reporters in a press conference.

Association’s secretary Dhaval Ajmera said the construction cost has gone up by Rs 400-500 per square feet, primarily in the last 45 days, affecting the affordable housing segment the most. He demanded that the Maharashtra government consider reducing the stamp duty from 5-6 per cent to 3 per cent to mitigate the impact of sharp rise in raw material prices, which have gone up due to the geo-political situation.

Ajmera also sought reduction in the GST rate of 18 per cent on raw materials like cement. He demanded ban on exports of cement and steel for a short period. He said the developers should be allowed to claim ITC. Stating that developers are operating on very small margin or no margin, Ajmera said developers would be forced to hike prices of their apartments from next month onwards.

The price rise could happen by an average 10-15 per cent, he added. “Some of the measures that are currently being considered include raising the prices of the unsold inventory which has not been delivered, by 10-15 per cent to cover the rising input costs.

“This move will not only impact the 2,773 projects which were approved by MCGM (Municipal Corporation of Greater Mumbai) in 2021 but many more to the extent of 2,60,000 units over the course of the next three years,” CREDAI-MCHI said in a statement. Meanwhile, commenting on the rise in raw material prices, Colliers India CEO Ramesh Nair said this could lead to price escalation especially for under construction projects. “This could dent sometimes in the market at a time when the residential sector has been seeing a revival in demand across the segments,” he added.

Trehan Group MD Saransh Trehan said the prices of cement and steel have increased sharply over the last two years.

“This has led to a sharp increase in our per square feet construction cost. We have not been able to pass on the increase in input cost to customers. But relentless rise in input costs is hurting our profit margins in a big way, and forcing us to think about the future course of action,” he said. The Confederation of Real Estate Developers Associations of India (CREDAI) is the apex body of private real estate developers in India. Established in 1999, CREDAI represents over 13,000 developers across 221 city chapters in 21 states.