Independent sources in the home loan business say there has already been a 9-10% increase in prices of real estate in upper and upper middle class localities of the city. Another hike is expected if the rates do not stabilize soon.
Builders mainly blame it on the fuel costs, which have disturbed the costing. As the situation is normalizing after Covid, the demand has gone up too. Competitive interest rates of less than 7% for home loans has also fuelled the demand. As it has spurred the real estate activities, the requirement of raw material has also gone up leading to a supply gap, said sources.
Gaurav Agrawala, secretary of Confederation of Real Estate Developers Association of India (CREDAI), Nagpur chapter, shared a note which shows an average increase of 50% in less than a year.
The cost of construction ranged from Rs1,300 to Rs1,500 a square feet earlier. This has now reached Rs1,800 to Rs2,200. The hike would be passed on to the buyers of even new units in the existing projects.
An increase of Rs500 a square feet leads to a major hike in the final price. The entry level price in Nagpur would go up to Rs3,500 a square feet from Rs3,000-odd earlier, he said.
Cement and steel are the two major components in the construction sector. According to the note, steel product rates have gone by 50% and it is 34% for cement.
Another builder said prices haven’t been hiked yet, but it has left builders bleeding.
Deepak Trivedi, a home loan consultant, said even before the Rs500 increase is fully passed on to the buyers, there has been a marginal hike already.
For example rates in Shivaji Nagar are expected to be Rs8,000 to Rs9,000 a square feet, it is Rs7,000 to Rs8,000 in Laxmi Nagar, Rs8,000 to Rs8,500 in Dharampeth and around Rs6,000 in Wardhaman Nagar. The rates were less by 9-10% over a couple of months ago, he said.
Manoj Rai of Bharat Parekh Homes, a consultancy firm, said low interest rates have spurred the demand. There are banks which are offering home loan for as low as 6.40%. This has increased the demand for housing, leaving its impact on the input costs.
Rai said even the cost of open land, at the minimum level, has gone up touching Rs2,500/ sq ft in some parts of the city and outskirts. It was at Rs2,000 a square feet over a couple of months ago. Constructed property commands as much as Rs12,000 per square feet on the upper end, it had come down to Rs10,000 a square feet during the pandemic slump.
Anil Nair of Pioneer Constructions said items across the board have become costlier due to increase in transportation cost. Even items like copper and sundry goods have become dearer.