Mumbai: Construction costs to go up, low-cost homes distant dream

Even as Maharashtra government has been emphasising on providing affordable housing, there seems to be no tangible effort towards achieving this.

Even as Maharashtra government has been emphasising on providing affordable housing, there seems to be no tangible effort towards achieving this.

This was evident in its budget, in which the state has proposed a 5% entry tax on long steel, which is expected to increase the construction cost significantly.

Long steel, a vital raw material in the construction business, will push the construction cost by approximately Rs 150-Rs 300 per square feet.

This step is apart from the hike in premium proposed in the budget for any incentive floor space Index (FSI).

According to Sandeep Ahuja, CEO, Richa Realtors, the move is a major let-down to the realty sector. “The hike will increase the cost of construction and make houses unaffordable,” said Ahuja. He said despite claims of affordable housing, there are no steps being undertaken by both the Union and state budget.

Steel is an important component constituting 15%-20 % of the total construction material. It is currently available at Rs 40 per kilogram and builders use at least 4-8 kilograms every square feet. The state’s proposal to levy an entry charge of 5 % will push up costs.

The National Real Estate Development Council (NAREDCO) has claimed that both the Union and state budget are a disappointment for the sector, which is currently facing a slowdown.

“The entire focus seems to be just to increase revenue without any thought for the current situation,” said Sunil Mantri, president, NAREDCO.

The real estate sector has been going through a slowdown, with the sales plummeting owing to the skyrocketing prices. Buyers have postponed purchase plans and are waiting for prices as well as interest rates on home loans to decrease, sources said.