Owning a house not easy when construction costs skyrocket

Tirupati: The middle class people's dreams of owning a house were getting shattered, thanks to the escalating construction costs. The inflated prices of every component that is to be used in construction including labour have been forcing the people to stop the projects midway or postpone their ideas indefinitely. The increase in cost of 10 to 25 per cent of homes depending on the area and quality of construction is exorbitant for the people who mainly rely on the housing loans and meagre savings.

The price of every component including sand, cement, steel, ceramic tiles and paints have skyrocketed during the past 9-10 months while electrical items have witnessed 100 per cent hike. This has resulted in rise in the cost of construction by Rs 50 to Rs 75 per sq ft. Steel merchants were saying that the price of steel had almost crossed Rs 80,000 per tonne which was around Rs 45,000 some four months back.

Cement was being sold at around Rs 400 per bag now whereas the labour cost was shot up beyond expectations. A quality mason has to be paid Rs 1,000 per day. A private employee Krishna started construction of a house in Tirupati almost 20 months back. He said that the prices of construction material witnessed a steep hike and getting sand became a Herculean task. All this has ruined his budget plans forcing him to slow down the works.

Builders were saying that as the market has grown up in Tirupati in recent times, they expected profits. They will have a little opportunity to hike the prices of flats as customers will not come forward to buy at higher prices. As such, they have to forego their margins. M Ramprasad of CREDAI said that the cost escalation will have an adverse impact on future projects and no builder may venture to take up new contracts. In the next one year the cost of construction per sq ft may cross Rs 5,000 which is around Rs 4,000 now on an average. The rise will be a huge burden on customers.

Normally, a two bed-room flat is built in 1150-1200 sq ft by any builder. Now, to reduce the total cost of flat, the builders have been reducing the size of flats to 1,000 sq ft only. "Then only the customer can get the flat at around Rs 50 lakh including registration cost, interiors etc., If this cost goes up further, they cannot afford and the flats will remain unsold and cause a huge loss to builders," commented another builder.