Property prices in Vizag scare home buyers

DESPITE slowdown in the country's economy, property prices surged 10-30 per cent in Visakhapatnam. Real estate experts attribute this to executive-capital tag to the city, ongoing infrastructural developments, shortage of land availability and rise in the rates of raw materials such as cement and steel used in construction of houses. As per market rates, the residential plots in Tagarapuvalasa, Anandapuram, Pendurthi, Kurmannapalem and Lankelapalem suburbs of Visakhapatnam, which cost around Rs 20,000 to Rs 40,000 per square yard a few months ago, are now priced in the range of 25,000 to Rs 50,000 per square yard.

Similarly, the flats in newly constructed apartments at Madhurawada, PM Palem and Murali Nagar witnessed 30 per cent rise in prices, while properties in Gopalapatnam, Sujatha Nagar, Chinnamushidiwada, Sheelanagar and Achyutapuram have also seen 20-25 per cent price hike. Though the increased property rates encourage the investor community, it is a big burden for the first-time home buyers. Along with skyrocketing land rates, direct and indirect taxes are continuously on upswing. All these had a cascading effect adding to the woes of middle-class home buyers.

The rates of cement and steel have almost doubled in the past few months and there had been at least 25 per cent rise in the prices of electric coils, PVC pipes, paints and hardware items.

"The cost of a cement bag has increased from Rs 225 to Rs 394, while steel prices rose from Rs 35,000 per tonne to Rs 65,000 per tonne during the last six months. Ultimately, the price burden will fall on the end-user," says B Srinivasa Rao, President, Confederation of Real Estate Developers Association (Credai) Vizag Chapter.

Though builders have not raised the prices already committed to their customers, the new buyers are likely to bear the brunt, he adds. Meanwhile, the plan of YS Jaganmohan Reddy-led government to make Vizag the Executive capital of the State has led to a fear of further rise in property prices in the port city. The number of registrations scaled up to 37,524 during August 2020 - February 2021 from 32,521 in the corresponding six-month period of previous year. It is not the same in other cities of the State. There is a huge unsold inventory in the real estate markets of Vijayawada, Tirupati and Rajahmundry. Owing to current situation of cash crunch, the realtors are unable to complete their projects in time.

To save the construction sector, the representatives of real estate bodies urge the State government to freeze the land rates and reduce the taxes. AP government increases land rates every year in the month of August. National Real Estate Development Council (Naredco) State General Secretary GSS Prasad urged the state government to maintain status quo this year. He says, "Due to impact of the Covid-19 pandemic, States like Maharashtra, Madhya Pradesh and Rajasthan have decided not to hike the land rates. However, AP government has not yet announced any relief to realty sector." The members of Credai Vijayawada chapter also requested AP government to reduce the registration stamp duty to 2 per cent from existing 7.5 per cent. It will not only give a breather to the real estate fraternity, but also help the first time home buyers, they say.