Blogs

December 27, 2021

Although the economy has started heading towards recovery, there is an unexpected roadblock: a price hike in the raw materials like steel, glass, iron, plywood, cement that are increasing with a drastic speed. At both the ends – the real estate project developers as well as the home buyers, there has been an influence.


Where the impact on future property development will be re-evaluated based on the economic circumstances, the concern lies with under construction properties. A massive hike in construction costs have been minimum upto 10% which makes the property price rise inevitable.

The Root Cause Behind the Steep Price Rise

Let’s understand what led to this steep price hike

Below are a few factors:

• The pandemic and disruption in the supply chain in the country due to geographical restrictions.
• The shortage of oil and massive hike in oil prices which led to higher transportation costs.
• The shortage of labours and raw materials across the market.
• The rise in steel prices on the global level.

How is this going to impact property prices?

The real estate industry is evaluating the effects of price hike towards their property price points.

• A slight halt can be observed in the demand of property in the real estate market.
• An increase in the square feet can impact the final ticket price of homes as the cap can only be restricted to certain parameters of construction.
• A withdrawal on the discounts and offers from the real estate developers can be observed. No compromises to be made on the quality of construction due to the essential raw material price rates.
• A re-set on the margins by the estate developers can be taken into action.
• More focus towards customer satisfaction and customization parameters would be taken so as to gain loyalty and trust amongst customers.
• The government policy revivals towards better taxation via GST can potentially help the real estate construction sector to recover sooner.

The Bottom Line:

A mutual approach towards making a stable and consistent profit as well as retaining customer trust would be the priority. Further actions to be implemented to adapt and overcome the future market uncertainties that will normalize the growth of the real estate industry as well as the home buying segment.