Claiming that prices of raw materials have increased by almost 40 to 45 per cent, Credai Maharashtra has said that it is left with no option but to temporarily stop the purchase of input materials and shut construction work.
“The prices of steel, cement and other construction materials have been rising steadily over the last two years. These have now skyrocketed at a level, beyond the affordability of many developers, especially in the tier 2/3 cities. As many as 61 city association members who form a part of Credai Maharashtra have been left with no option but to temporarily stop purchases and shut down the construction activities,” said Sunil Furde, president, Credai Maharashtra.
Furde said that rates of steel, cement, bricks, sand and wash sand, electric wires, fittings, tiles, pipes, sanitary-ware, fabrication, sand, secondary minerals and others, have increased by roughly 40 to 45 percent and that the present impact on input costs is about Rs 400-600 per sq ft.
Furde said that this will have a direct impact on the homebuyers, especially in the mid and affordable segment.
He demanded that the administration and government agencies should verify whether this increase in the cost of construction materials is natural or due to cartelisation, hoarding or profiteering.
In order to draw the attention of the government on the issue, all members of Credai Maharashtra are planning to stop work. Subsequently, they have also requested Maharashtra Real Estate Regulatory Authority Chairman Ajoy Mehta, through a letter, to extend the last date of completion of projects by six months at least so that developers will get time to hold on till prices rationalise.
Furde said Credai Maharashtra through its various city associations has made several representations to Deputy Chief Minister and Finance Minister Ajit Pawar and Revenue Minister Balasaheb Thorat on various subjects requesting for government’s intervention during the pandemic.
The real estate industry has been resilient during the pandemic, thanks to stamp duty relaxations, lowest home loan interest rates and offers by developers. The industry which is the second largest employer will not be able to absorb this uncontrollable price rise and many projects will be delayed or halted in the absence of intervention which will directly affect the consumers, it said in a statement.
Apart from this, the one per cent Metro surcharge on all property purchases in Pune, Mumbai, Thane and Nagpur is likely to be re-imposed from April 1 this year. The surcharge will also have a direct impact on consumers who want to buy a house.
Furde said that Credai Maharashtra is strongly opposing the proposal and urged the government to reconsider its decision.
According to statistics shared by Credai Maharashtra the rate of steel, which is an important component of the construction material, was Rs 42,000 a year ago (per ton) but is now around Rs 84,900. The cost of cement (per bag) used to be Rs 260 but is now Rs 400. The rate of four-inch bricks was Rs 6,500 per thousand which has now gone up to Rs 8,000.
The rate of sand (per brass) has gone up from Rs 6,000 per brass to Rs 7,500 now. While the rate of wash sand (per brass) has also gone up from Rs 3,800 to Rs 4,800 per brass. Along with the construction material, rates of electric wires, fittings, tiles, pipes, sanitary ware, fabrication, sand, secondary minerals, murrum and others, have also increased by about 40-45 percent, Credai Maharashtra said.
About 10,000 construction sites across Maharashtra are currently employing roughly about a million workers. A closure such as this will affect them directly and could result in a minimum delay of six months, it said.
More than 3000 builders are members of Credai Maharashtra.
Homebuyers are against the move by builders to stop work in Maharashtra.
“How can they stop construction when they have launched projects and taken the booking amount and subsequent EMIs for the projects. Price rise cannot be a force majeure situation since raw materials are abundantly available,” said Abhay Upadhyay, president, Forum For People's Collective Efforts and member, Central Advisory Council, RERA, MoHUA.
Since the last decade prices of both cement and steel were available at rock bottom prices. Even then they did not complete their projects as is evident from thousands of incomplete and ongoing projects across India, he said.
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