The Real Estate Industry Copes With The Raw Material Price Hike

April 11, 2022 | mins read

The cost of raw materials has been one of the key variables influencing property prices in recent years. Steel bar and cement price increases have added fuel to the construction budget dilemma. Plastics, man-made polymers, and resins, which are used in everything from plumbing to insulation, have also seen fast price increases in recent months. Many developers are facing a hurdle as a result of the pandemic-induced surge in costs of crucial raw materials and a shortage of supply with traders. Because of the fresh raw materials problem, many home projects that were restarted following the second wave of the epidemic are expected to stall down again.

Since the country’s implementation of RERA, developers have been unable to raise property prices after submitting project details to the appropriate authorities. As a result, the sector’s profitability will be significantly harmed by this price increase, which comes on the heels of the pandemic’s devastating impact and the resulting lockdowns. Such unjustified price hikes should be scrutinized by competent authorities.

Due to this, the developers have resorted to increasing the prices of their residential properties by 6-8% in numerous cities across the country. To combat the input pressure, they are considering slowing down the construction activities in addition to raising prices.

Two key factors affecting these prices are the COVID-19 Pandemic and the ongoing Russia-Ukraine war. Here’s how

The COVID-19 Pandemic
After the second wave, the situation in the real estate market worsened. After a lengthy pandemic, many investors were afraid to engage in the market, resulting in a substantial drop in demand in the housing market. Along with it, the market supply also dropped due to market developers’ unwillingness to increase supply, resulting in a significant market decline.

Whereas on the contrary, the pandemic has also demonstrated that buying an apartment is a far safer option than dealing with the house rental predictability. The Indian Reserve Bank is also offering affordable interest rates on home loans to drive home buyers to spend with a cost advantage in real estate

The Russia Ukraine War
The ongoing Russia Ukraine Conflict also had an impact on the real estate industry. The prices of cement and other construction materials have surged. This is a great example of how overseas geopolitical issues have an influence on the real estate market and mortgage rates.

Interest rates were rising before news of the crisis reached the rest of the world, but after Russia’s attack on Ukraine, mortgage rates plummeted for a brief period around the world. Regardless of the recent reduction, mortgage industry experts predict that interest rates will rise in the long run. The sole cause of this effect is the fear of war among major nations. The Ukraine-Russia conflict is likely to culminate in a slew of economic penalties, which could wreak havoc on global commodity and energy markets.

There may be numerous factors affecting the real estate market. But when it comes to investing or buying a house, you need a builder you can trust. With a legacy of 50 years, Goyal & Co. makes the best choice for the property investors.