Construction costs soar as steel prices rise

Vijayawada: Construction cost has been steadily increasing due to increase in the prices of steel and other material and causing huge burden on those who wish to construct houses. Due to high cost of land value in the capital region of Vijayawada, Guntur, Mangalagiri and Tadepalli, many middle-class families  are preferring to buy apartments instead of independent houses.

The price of double bedroom flat reached to Rs 45 lakh on the outskirts of Vijayawada and crossed Rs 55 lakh in the city limits. The rise of building material prices leads to rise of construction cost. In the beginning of this year, the builders faced many problems due to rise of cement prices. Now, steel price increased by Rs 10,000 per tonne during the last two months.

The tonne steel now costs over Rs 55,000, which is very high, said Ch Sudhakar, general secretary of Confederation of Real Estate Developers Association (CREDAI) AP chapter. He said the steel price was increased by Rs 20,000 in the last 15 months.

He recalled the steel price per tonne was only Rs 35,000 in September-October 2017. He said the realtors who are facing uphill task in selling the apartments, will be troubled further if the prices of steel and building material further shoot up. He said already more than 15,000 flats constructed in the capital region are yet to be sold due to lack of buyers.  

There is no valid reason for increase of steel prices. The traders allege that steel manufacturers syndicate had increased the prices as every builder must buy it for construction purpose.   

The prices of PVC pipes increased by 5-7 per cent during the last six months due to rise of petrol and diesel prices. K Ramana, wholesale PVR pipes dealer in One town, said the trading activity decreased due to rising prices. He said demonetisation and the GST had badly affected the construction industry and leading to downfall of business. 

The house site plots are costly in Vijayawada city and suburbs. Even upper middle-class families are unable to buy house sites as the prices vary from Rs 30,000 to Rs 70,000 per square yard.    Keeping in view of the high prices of house sites, most consumers are purchasing flats, said P Yeshwant Kumar, home loan Sales Manager, SBICAP Securities. 

Corporate groups have pumped hundreds of crores for construction of multi-storied buildings between Vijayawada-Guntur along the highway after bifurcation of the State. The square feet construction cost is not less than Rs 4,500. Two BHK flats cost more than Rs 50 lakh and 3 BHK flat cost between Rs 60 lakh-Rs 80 lakh depending upon the plinth area.