With the industry's announcements, there is the possibility to raise the prices of steel from April 1. As a result, builders in districts are a worried lot and will severely impact their business.
Steel prices are expected to rise steadily, putting a strain on the sector in general, and especially in Krishna and Guntur districts, owing to a peculiar mart.
Further, it is expected that steel prices will constantly increase, and it is likely to take a toll on the sector in general. More specifically, the impact will be on Krishna and Guntur districts due to the region's peculiar market conditions.
For the tenure of four months, steel prices have almost doubled from Rs 45,000 in November 2020 to Rs 72,000 in March 2021. Further, the prices of steel are expected to rise by another Rs 4,000 from April 1.
According to the statement made by Sunil Nuthakki, a builder from Poranki, an increase in steel prices would mean a cost increase of Rs 70 to Rs 80 per square foot, adding that the prices of all building materials have risen by 40 to 50% in the last six months.
Even the cost of raw material is continuously increasing, builders in Krishna and Guntur districts do not have the freedom to increase the prices of finished houses because of subdued demand.
Y Rambabu, another builder, said they witnessed some improvement in demand early days after the lockdown was eased. Also, they have uncertainty over the fate of the capital, and buyers are not yet ready to invest in houses in the region.
Even after releasing lockdown restrictions, prices of raw material skyrocketed despite capital uncertainty. Rambabu said that “We cannot increase the prices according to raw material costs as the demand has not improved. The future of real estate and sector look very bleak presently.” here, the input prices are taking away margins, and several small builders are supplying poor quality raw material. “They are using low quality iron and cement to reduce the costs as they could not increase the prices,” said another builder on condition of anonymity, adding that “We are forced to lower construction costs as we cannot increase the price.”