Real estate developers seek intervention from the Housing Ministry in response to rising cement and steel prices.

Property developers are concerned about the rising contract sum due to continuous increases in raw material prices such as steel and cement, as well as an additional surge in the backdrop of the Russia-Ukraine war.

Concerned about rising costs, realtors have asked the Ministry of Housing & Urban Affairs (MoHUA) to intervene through their pan-India body, the National Real Estate Development Council (NAREDCO), to halt the rise in the cost of building materials, particularly steel and cement.

“The price increase is the result of unprecedented global events, such as the Covid-19 pandemic and, more recently, the Russia-Ukraine war,” Naredco wrote in a letter to Housing Minister Hardeep Singh Puri. “The cost of real estate projects has skyrocketed as raw material prices have risen.” “Developers bear the brunt of rising construction costs while selling prices remain unchanged.”

NAREDCO has proposed that the import duty on steel be eliminated from 7.5 percent for a two-year period, and that steel exports be prohibited for two years until the issue of high pricing information in domestic markets is resolved.

Furthermore, it asserted that cost of steel and cement should be regulated until domestic supply is restored, and that both cement and steel should be categorized as low goods and services under Taxation (GST). In addition, the council proposed allowing the use of imported cement.

According to NAREDCO, with the easing of a pandemic, real estate has begun to see green shoots of revival, but rising input prices are having a negative impact on real estate developers.

“Estate agents have already sold the stock; with rising construction costs, the burden may be shifted to home buyers.” “We also politely request that the RERA authorities consider this a Force Majeure situation and allow the flats’ selling prices to rise,” said Sandeep Runwal, President of NAREDCO Maharashtra.

Rising input material prices, he claims, will be a major setback for the government’s ‘Housing for All’ mission, making affordable housing a distant dream.

Cement prices nearly quadrupled to Rs 360 per bag, up from Rs 250 in January 2020, and steel prices nearly tripled to nearly Rs 90,000 per tonne, up from around Rs 39,000 two years ago.

High cement and steel prices, according to developers, have been a major source of concern, and in addition to industry bodies previously speaking out, many tech titans and ministers have made their case on a variety of public platforms.

Last year, Union Minister for Road Transport and Highways Nitin Gadkari warned steel and cement manufacturers about the irrational price increases and raised the issue with Pm Narendra Modi. He also stated that government intended to establish a steel and cement regulator.

While the price of vital raw bricks and steel has been rising in recent quarters, developers are concerned that the cost increase will have to be passed on to homebuyers this time.

Housing sales in key property markets are rebounding as a result of record-low home loan interest rates, govt stamp duty reductions, stable prices, and incentives. Most devs, however, have yet to raise property prices, preferring liquidity over profit.

The price war between cement and property sectors has erupted on several occasions over the years, with the latter filing charges with India’s Competition Commission.

As part of the economic liberalisation policy, cement was de-controlled in 1989 and de-licensed in 1991. The industry makes plant installation decisions based on market demand.