Property rates to get hotter with rising temperature
Residential property to get costlier by 15-20% in next six months due to rising cement prices
DESPITE THE dearth of potential home buyers, majority of the residential property in realty sector is slated to increase by 15-20 per cent in next six months.
Industry experts point rise in prices of construction material like cement and steel as the major reason for real estate developers to hike the property price, in addition to labour cost and fuel hike. In the past fifteen days, cement price has seen a hike by 6 per cent.
“The cement consumption in 2012-13 is expected to grow manifold. Also the government’s focus on basic infrastructure as announced in this budget will keep the price high,” said Vinod Juneja, managing director, Binani Cement.
Realtors feel that costlier loans have forced home buyers to postpone their decision and have resulted in slow down in real estate market.
“Last year the realty market was moving pretty well but this year the slow down was witnessed in January itself. It is only the first time buyers are going for the housing projects in country. Investors and people going for second or third homes have totally adopted to the wait and watch kind of situation,” said Lalit Jain, national president, CREDAI. Jain highlighted that in comparison to the same period last year, presently the real estate developers are spending 40 to 60 per cent more on construction material. “The rate at which our cost is going up we are left with no other option but to pass it on to our consumers. However the situation can improve only if we see some correction in interest rate on home loans in near future,” he added.
It is estimated by industry experts that home sales in New Delhi and National Capital Region (NCR) has gone down by 25-30 per cent this year in comparison to the same period last year.
Cement consumption in 2012-13 is expected to grow manifold. Also the government’s focus on basic infrastructure as announced in this budget will keep the price high”
“The current scenario is an outcome of many macro economic factors. Potential buyers are holding back anticipating correction in interest rates and real estate developers are facing the brunt of rising construction costs. So we can expect much from developers and considering construction price going up realty sector will face hike in near future,” said Neeraj Bansal, director, risk consultant (real estate), KPMG. He added that with home buyers adopting the wait and watch scenario, the ratio of demand and supply has been affected. “Today people have more option of housing what they used to have a year or two before, thus there is tough competition,” said Bansal.
Harbans Midha, director, Adhunika Estates, a property consultant based in Lajpat Nagar said that in the past one year, property demand in capital and NCR has gone down by 30-40 per cent. “The rising cost of realty is holding the potential buyers. Hopefully things are expected to move in next six months,” he informed.