Housing in Karnataka gets costlier by 20%
Creating waves across the state, housing in Karnataka has turned out to be a nightmare for all the property buyers, since prices have shot up by as much as 20%. For those, who wish to own a property in the state or be the proud owner of a flat in Karnataka after a month, bad news steps in for them since they are required to pay 15-20% more than the prevailing rate.
According to CREDAI– Confederation of Real Estate Developers’ Associations of India, input cost for construction have witnessed a sharp rise in the last few quarters. Eventually, with the increased cost of construction, price of housing units have taken off significantly. This takes a toll on the number of property transactions and limits the purchasing power of the buyers.
Increase in cement prices
After going through a price correction in the prime markets due to slow demand, price of cement have worked its way up by over 30% and stood at Rs 275 per 50kg bag in a month. According to property analysts, if the trend continues, a bag of cement will rise to Rs 325 per 50kg. This, as a result, will act as a huge blow to the realty sector and will make purchase more costly and will cripple the ailing real estate significantly.
Cement makers attribute the growth to a hike in raw materials prices. Stocks of major cement companies rose by 20% as other construction components(such as steel, iron and sand)rates witnessed a sharp rise. With a rise in cement prices, construction cost will fire up significantly and the burden of increased cost will fall on the buyers and end-users.
Analyst’s perception
According to property analysts, the price of raw materials for construction have exceeded beyond the correction level in the last few months. Consistent hike in steel, cement and sand cost will adversely affect the realty sector. To make matters worse, a sluggish demand cycle due to monsoons will cripple the realty sector like never before. Hence, any hike in the price of housing units will discourage the buyers to a great extent.
After the festive season and post-monsoon quarters, the prices may likely go up to around 18-20%. This is a real backbreaker for investors, developers and buyers. The prime developers, will feel the heat of reduced number of property transactions in the festive seasons, however small builders will see the face of huge loss eventually.
