India To Witness Major Real-Estate Price Surge In Upcoming Years

With the recent surge in property prices, developers fear they may not be able to deliver projects with the continued upsurge in the prices of construction materials. According to research conducted by Credai, the realtors' apex body, around 40 % of real estate developers feel that the government needs to take immediate action to hold and limit the surge in construction materials prices to let them deliver their projects without any delays and obstructions. As per the Credai National President Harsh Vardhan Patodia, real estate value has already increased by 5-8 % which is expected to further surge by 5-7 %, making around 10-15 % of increase all around India.

Due to the ongoing war between Ukraine and Russia, the International market is at its all-time high, leading to an increase in prices in the market. The skyrocketing price of the raw materials has led to an upsurge in property prices and made it difficult for the developers to deliver affordable housing projects. According to Patodia, for the past year, the developers have managed to absorb the upsurge but eventually, the burden will fall on the property buyers who may not auger well with the inflated prices.

Credai's president-elect Boman Irani added that the price of housing projects in Mumbai has already surged by 5-8 %. The government needs to intervene and excise control over the prices of raw construction materials. It also sought GST input credit on building material, incentives to customers through stamp duty discount/waiver, and reduction in interest rates. He is hopeful that with an end to the ongoing war, the upsurge will discontinue and steel prices will rationalize bringing relief to the customers.

CREDAI surveyed its member developers which concluded that most developers feel that the upsurge in the material costs has directly led to the price hike of properties by 20 %, directly impacting the real estate prices.

Around 39 % of developers feel that they won’t be able to deliver projects if the relief in prices is not provided. Around 46 % of developers feel that they would be able to continue construction but might delay delivery even if no relief in raw material prices is provided.

As per the research conducted by Credai, around 66 % of developers feel that they will be forced to stop construction momentarily until the raw material prices drop. Labor unemployment and increased property prices are immediate effects of continued price hikes as per the 76 % of developers. 76 % of developers feel that they would only be able to continue construction for up to six months if the raw material prices don’t drop.

The research conducted by Credai was from March 29 to April 11, 2022. Around 1849 respondents spread over 21 states of India participated in the survey. These included 86 in the North, 183 in the East, 596 in the South, and 247 in Central India. Of these 677 were from Tier 1 cities and 1,172 were from Tier 2 and Tier 3 cities.