Zooming prices of cement, iron may further hit realty

Vijayawada: Skyrocketing prices of cement, iron and hardware material is imposing a huge burden on the consumers, which may affect the construction activity in the capital region of Amaravati in near future. Realty market, which is facing sluggishness for the last four years, may not recover if the prices of cement and iron witness further rise.

Prices of premium cement brands touched Rs 330 per 50 kg bag from Rs 230 ago and iron prices reached Rs 50,000 per tonne from Rs 45,000 three months ago. Iron and cement are the two important building material used in construction. Common people constructing houses are worried with the spiralling prices of cement and iron.

Cement prices decreased from Rs 280 to Rs 230 three months ago after prolonged struggle made by realtors. During the last two months, the cement prices gradually increased and now reached to Rs 330 per 50 kg bag. There is a variation of Rs 20 per bag for premium and non-premium brands of cement.

Similarly, the iron prices have increased from Rs 45,000 per tonne to Rs 50,000 in the last three months. Besides, hardware material prices too are increasing between 5 to 10 per cent every year.

High cost of land prices in Vijayawada, Guntur, Mangalagiri and Tadepalli has already hampered the progress of realty market in the capital region.

Now, the increase of cement and iron costs will affect the construction activity badly in near future forcing builders to stop the construction works. Consequently, it will also affect livelihood of thousands of people in the sector.

Chigurupati Sudhakar, state president of the Confederation of Real estate Developers Association of India (Credai), said the realty market in the capital region was facing slump and now the rise in cement and iron prices would add to it. He said that about 20,000 apartment flats in the capital region of Vijayawada, Guntur, Mangalagiri, Tadepalli and other areas are yet to be sold and builders are waiting to dispose them of. He said the realtors will face problems with increasing cost of construction.

After bifurcation of the state, big realtors spent hundreds of crores in the capital region for construction of apartments, individual houses and laying ventures. Unfortunately, the market has not picked up as per the expectations during the last four years. High prices of apartment flats are said to be one of the reasons for slow sales.

A 2BHK flat in the outskirts of Vijayawada costs minimum Rs 40 lakh. The price of 2BHK within city limits is Rs 50 to Rs 60 lakh depending on the quality of material, plinth area and location of the building. Prices of 3BHK flat are in the range of Rs 70 lakh to Rs 1.20 crore in the city.

Due to high cost of land, the investors have no option but to sell the flats at very high price. K Satish, a builder in Vijayawada, said there was no hope that the realty market would recover anytime soon. He lamented that the increasing prices of cement and iron may affect the construction activity and impose burden on the buyers.

The cement companies do not reveal the reasons for the rise of prices. There are allegations that the cement companies act as syndicate and increase prices in the summer which usually registers increased construction activity.

Middle class and upper middle class families are not in a position to purchase house sites and construct an individual house within the city due to high cost of land. So, the only option left is purchasing flats or group houses.