Home jinx: Slump in sales, but costs go through roof

Indore: Ashutosh Singh, resident of Geeta Bhawan, wanted to quit his rented apartment to own his dream home. Despite a slump in realty sector, he's unable to draw benefits of low prices or booking discounts as cost of construction material has spiralled by 20% over last six months. And this has negated the window of hope provided by the government, which kept collector guideline rates untouched this fiscal.
"District administration has not hiked guideline rates across the city. Cost of every square foot is same as previous year," said P Narhari, district collector.
Currently, real estate sector is on a downward spiral with almost 40% dip in sales. But what's triggering concern is that land prices and cost of houses is rising due to spurt in prices of building material, according to Confederation of Real Estate Developers' Associations of India (CREDAI). "While rates of houses have not fallen, sales too are stagnant," said a CREDAI member.
Experts claimed continuous rise in construction material cost and high EMIs have shackled home-buyers. "Rates of construction material have been rising for past six months. Government tax policy is another cause of disenchantment among buyers," said Sandeep Shrivastava, chairman, CREDAI, Madhya Pradesh.
There's sharp rise in cost of cement, sand, stones, sanitary items, electric items and building material. "In past six months, cement prices have been fluctuating. Consumers are confused and they are hoping prices will dip and investments can be made. But end-user is not aware that nothing will change in their favour soon," said Rajesh Gattani, city-based cement trader.
Adding to woes of home-buyers is the hike in stamp duty. "Guidelines rates were not increased to douse resentment among home-buyers. Consumers are waiting for prices to fall, but this won't happen in next few months. State government has already incurred losses of Rs 400 crore in city from e-registries of flats and plots," said Pramod Dwivedi, advocate, department of registration and stamps, Madhya Pradesh.
He also said stamp-duty hike has offset the benefit of guidelines rates being untouched. "Government needs to understand that policies should be made that would help common man to buy a house," he said.