STEEL PRICE HIKE HITS REALTY
Steep hike in the rate of steel and iron has brought construction activities to a halt. Prices have increased by 60 per cent in the last six months and 30 per cent in the last two months. Unable to bear escalating costs, contractors and builders have decided to stop their works for the time being.
With the implementation of Real Estate Regulatory Agency (Rera), the builders are now urging the government to allow them to revise the sale agreement upwards if the overall costs exceed five per cent by arguing that they can manage cost escalation only up to 5 per cent and the rest has to be borne by the buyers.
With sales decreasing in the past three months, iron and steel traders too are suffering great loss.
The state government’s efforts to persuade steel manufacturers to reduce the price of iron and steel for government projects have failed.
Steep hike in the rate of steel and iron has brought construction activities to a halt. Prices have increased by 60 per cent in the last six months and 30 per cent in the last two months.
As the construction works are not progressing, workers are the worst hit.
People from middle income groups, who had begun their house construction works on independent plots have stopped it for now while those who had plans to begin works, deferred it.
The price of a tonne of steel was between `30,000 and `36,000, depending on quality till August 2017. The escalated price now is between `55,000 and `60,000.
Builder and Credai former national president C. Shekar Reddy said that 80 per cent of total construction costs come from cement, concrete and steel. “The usage of steel has increased significantly in building apartments and high rise buildings. For providing parking facilities in cellars alone, a huge quantity of steel is required. As the steel prices have almost doubled now, the overall project costs have been altered and builders are not in a position to finish projects with old cost estimates,” he said.
“Around 5 kg of steel is required for construction of a sq.ft space. The overall cost has been altered as steel prices have doubled. It is impossible for middle-level and small builders to complete projects on these rates. They will stop construction and delivery which will adversely affect real estate sector on the whole,” he added.
The price of steel and cement started showed an increasing trend, with GST, from July 1, 2017. While steel was burdened with 18 per cent GST, it is 28 per cent in the case of cement.
Builders Association of India (BAI) has already served notices on the state government threatening to stall all the works pertaining to irrigation and infrastructure projects and two-BHK housing scheme for poor citing steep increase in steel prices.
BAI national vice-president S.N. Reddy said that all the members of the association are facing lot of difficulties.