NCR- based real estate builders have hiked home prices by 10% and may further escalate soon as the raw material costs rise. The reason for the high raw material cost is global supply chain disruptions. The cost of building materials like cement and steel has significantly inflated by over 20% yearly as of March 2022.
The builders/developers have been absorbing the continuous change in cost impact until now but not anymore as the prices are just going high each passing day & is becoming increasingly tuff to adjust.
The Ashiana Housing Ltd JMD Ankur Gupta told the press that "The units we were selling at Rs 3400 sq ft are now being sold at Rs 3800 sq ft. On an average, there is an increase of 8-10% across our portfolio, and we might have to take another hike if the raw material prices continue to soar."
Developers also said the increase in fuel prices and general inflation has also been the cause for the price escalation.
Nayan Raheja from Raheja builders said, "We are closely watching the situation and prices may go further north if correction does not happen within the next 6 months."
Raheja builders have already increased prices by 10% across the board, following mounting input costs.
The executive director of Alpha Corp, Santosh Agarwal, said, "The price rise issue has been an ongoing challenge for the past two years, and the current turmoil has skyrocketed the price of key raw materials such as steel and cement. We plan to increase the price by a nominal amount of 5%."
The current fiscal year (Fy2022) of Q4 analysis indicates that the top-listed developers have raised the cost of residential dwellings by up to 10%, propelled by market conditions.
Over the past years, the inflation in construction prices has skyrocketed northward by 11 - 15%, with chief building materials, wholesale price inflation, and labour costs witnessing a two-digit surge.
The CEO of Smartworld Developers, Vivek Singhal said "Developers cannot stop or sway the under-construction work as they have committed timelines for buyers. The rising costs are impacting the overall project viability; we are left with no choice but to make price adjustments against inflation.”
However, the market insights show that the Delhi -NCR is robust and will continue to yield more sales despite the hike in prices.
Key market players including Godrej, DLF, Sobha, Oberoi, Lodha and Mahindra have raised costs quarter on quarter and stated that it has not really impacted the sales momentum.
Mohit Jain, managing director of Krisumi Corporation, said, "At Krisumi, we saw an uptick in demand and entered the Rs 400 crore club. The sustained demand momentum has encouraged us to review our pricing strategy, and we plan to increase the prices by 10%."
