Why Property Prices are rising in 2022
By magnoliaAdmin | Mar 23, 2022
Property price is expected to rise in the range of 10-15% in the 3-6 months as developers are unable to absorb future the rising price of key raw materials like steel, cement, copper, PVC etc and would be forced to pass the burden to buyers, the apex body of real estate developers. CREDAI said on November 2021.
The confederation of Real Estate Developers Associations of India (CREDAI) conducted the Real Estate Developers sentiment survey 2022 from December 30 to January 11 2022. As many as 1,322 developer members participated in this survey.
The reports said, around 60 per cent of developers foresee a price hike up to 20 per cent in 2022, due to an increase in the price of building materials cost.
As per the survey report, 35 per cent of respondents expect prices to rise by 10-20 per cent, while 25 per cent of developers see up to 10 per cent hike in rates.
Prices of various grades of steel have increased in the range of 60-100% between July 2020 and May 2021. After the price hike in May 2021, the price of the hot-rolled coil (HRC) rose to Rs 72,000 per tonne, the highest since 2008. In July 2020, it was priced at Rs 36,500 per tonne. Cement prices also inched up more than 50-70% from 2020 to 2021. The average retail price of cement is approx. Rs 420 a bag, at present, whereas the same in FY20 was about Rs 280. Many fear that the price is likely to increase further in the future.
Trehan Developers managing director added, Saransh Trehan pointed out that construction costs rose by 10-20% compared to last year. “Developers are left with no elbow room to absorb this increase in raw material cost, unwillingly most developers will have to offset the rise in cost by increasing the price to some extent,”.
Online sales make up to 25 % of the business of 39 % of respondents. Around 60 to 65 per cent of developers are trying to explore new business models in 2022 like co-working, and co-living, as per the survey report.
Around 96 per cent of the developers are planning to launch residential real estate projects in 2022.
Suggesting relief measures, Patodia said the government can consider either allowing an input tax credit for real estate projects or rationalisation of GST on various construction raw materials from their current marketing rates.