Construction costs hit the roof as raw material prices shoot up
The construction sector, hit by the pandemic and related restrictions, is facing a second blow with the cost of materials seeing a steep hike as the cascading effect of fuel price hike. One estimate pegs the increase at about 35% over last year.
Crucial inputs such as steel, cement, sand, stone aggregates, plywood materials and M Sand have seen a price increase in the last one year, pushing up the overall construction cost. The construction of individual homes has become expensive with cost per square for a moderate structure going up from a range of ₹1.5 lakh-₹1.75 lakh to ₹2 lakh-₹2.5 lakh, industry sources said.
“Roughly, in the last one year, the cost of construction has gone up by about 35% . This has been caused by increasing diesel prices and a shortage of labour,” said M. Ramesh from Builders Association of India, Karnataka chapter. Labour cost alone has increased by almost 25% after migrant labour left Bengaluru during the last lockdown, he said, adding that the situation had not improved much since.
He said that the sluggishness in the industry has slowed down the payments, choking several contractors.
In the last one year, while steel (TOR steel) price has gone up from a band of ₹55,000-₹60,000 per tonne to ₹64,000-₹73,000, the price of structural steel has increased from about ₹65,000-₹70,000 a tonne to ₹80,000-₹90,000.
Cement price moved from about ₹350-₹400 per bag to ₹440-₹460. The cost of a lorry load of river sand has exceeded ₹1 lakh. The M Sand used for plastering has seen its cost increase to₹1,300-₹1,700 from about ₹1,200-₹1,300 a tonne. Plywood cost has gone up by 20 %.
Similarly, the price of solid concrete blocks, bricks, plumbing and sanitary ware have also seen an increase. According to Mr. Ramesh, except for paint that has only seen a marginal hike, all others have seen a steep increase.
Nagabhushan V, a civil engineer in the city, said in a market that was already stressed due to the downward trend in the economy, inflation in construction cost has hit the business further. “We hope costs will come down after unlocking now. But we have had several projects indefinitely postponed.”
This, in turn, is hitting consumers. Roshan Chengappa, who started building his house in Kodigehalli just before the pandemic, said he was forced to continue with the project since it was half done, but it had turned very stressful due to non-availability of labour and rising costs. “Accounting for the delay in completion of the project, additional interest paid on loans and rising construction cost, the project estimate has shot up by over 40%.”
(With additional inputs by K.V. Aditya Bharadwaj)