Surging Steel, Cement Prices May Make Owning a Home Costlier in Coming Two Quarters

Bangalore, 03rd February, 2017: Steel prices have gone up by around 30% and general metals have risen in cost by around 30% in the last few months or so. Essential inputs to construction such as cement and sand have seen an increase of around 20%. Further, the proposed introduction of the RERA Bill by April 30th as originally scheduled will mandate that real estate developers maintain a separate account, which will be used towards timely construction. All these factors – from rising input costs of steel and cement as well as general metals and the RERA Bill, coupled with the impact on real estate from the Budget may add to base line prices w.e.f April 2017, making residential units more expensive and compel developers to pass down additional costs incurred to potential consumers.

“Thesefactors can change the dynamics of the real estate marketin Bangalore in the next two quarters”, says Mr J. C. Sharma,President, CREDAI-Bangalore. “Prices that are currently on the low, are likelyto rise in the next two quarters. Considering the skepticism ofpotential home buyers with regards to price changes, there has been an uptickin enquiries related to home purchases and we have been trying address all thequeries”. 

“Keepingthese in mind, it would be wiser for a prospective home buyer to invest in ahome now. The market is currently stable and the buyer can command the bestprice possible, with a range of amenities”, says Mr. Suresh Hari, Secretary,CREDAI-Bengaluru. 

There are afew other factors that make investment in a home a wise decision in the currentscenario.

1. Loaninterest rates lower than ever: The basis points for home loan interest rates have beenreduced by almost 0.5 in most banks, making now a great time to buy ahouse. State Bank of India (SBI), the country’s largest lender, hasreduced its marginal cost of funds based lending rate (MCLR) by a 90 basispoints, among the steepest interest rate cuts in a long time.  

2. Budgethousing now much more affordable: Budget housing got a boost with land prices plummeting,especially in fringe city areas around Bengaluru, for the announcement by PrimeMinister, Mr. Narendra Modi; “This is in keeping with the mandate of PrimeMinister Narendra Modi's larger plan of 'Housing for All' by 2020”.  

3.Expectations from the upcoming Budget make it the best time to invest:  The expectations from theforthcoming budget is that it is going to hopefully put more power into the handsof the buyer, making it a great time to buy a home. There is a need to bringinto force tax benefits to a buyer purchasing a home under construction rightfrom the time he begins to pay interest on his loans. This will decrease theburden on the buyer and increase the speed of loan disbursals as well. There isalso the hope for an increase in tax deduction limits for housing loansparticularly for those in the metropolitan areas. Increasing the amount ofhouse rent deduction that a salaried person can claim is also hoped to beincreased, which provides further incentive to buy a home right now.

The marketis moving towards greater transparency. Added to that the current ease ofpurchase and the various reasons making it conducive to invest in home, makenow the great time to buy. 

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