The average construction cost for housing projects has soared by 39% over the past four years, driven by a sharp increase in the prices of building materials and labor. This significant rise has put additional financial pressure on developers and homebuyers alike, reshaping the dynamics of the real estate market.
Key building materials, such as cement, steel, and bricks, have seen unprecedented price hikes due to supply chain disruptions, inflation, and increased demand. Labor costs have also risen steadily, reflecting a shortage of skilled workers and higher wage expectations.
Industry experts attribute the surge to global economic factors, including the pandemic-induced disruptions and geopolitical tensions that have escalated raw material costs. For developers, this has meant slimmer profit margins, delays in project delivery, and the need to pass on costs to buyers.
The steep rise in construction costs has impacted housing affordability, particularly in metropolitan cities, where home prices were already on the higher side. Developers are now calling for government interventions, such as tax relief and subsidies on raw materials, to mitigate the burden and ensure sustained growth in the housing sector.
The rising construction costs underline the urgent need for policy-level measures to balance affordability and profitability in India’s real estate market.
