Homebuyers in Chennai may soon face higher property prices as construction material costs have risen sharply over the past few months. Industry stakeholders estimate that the cost of key building materials has increased by more than 23%, a development that could push housing prices up by nearly 10% if the trend continues.
According to developers and contractors, the rise in costs is being driven by a combination of factors, including escalating diesel and gelatin prices linked to the ongoing conflict in West Asia and a significant supply shortage caused by the closure of several unauthorized quarries in Tamil Nadu. While industry leaders have welcomed the government’s efforts to crack down on illegal mining activities, they argue that the sudden reduction in material availability has disrupted supply chains and created severe pressure on the construction sector.
Recent market data indicates substantial increases across several critical construction inputs. Prices of Ready Mix Concrete (RMC), a widely used building material, have risen by ₹300 to ₹500 per cubic metre depending on the grade. Popular grades such as M20, M25 and M30 have recorded increases of at least ₹500 per cubic metre. Similarly, construction aggregates, M-sand, P-sand and road-laying materials have become significantly more expensive, adding to project costs for developers and contractors.
Real estate developers warn that the increase in input costs is likely to be passed on to consumers. Industry representatives estimate that a house currently priced at ₹1 crore could become approximately ₹10 lakh more expensive if the current cost pressures persist.
The situation comes at a challenging time for the housing sector. According to P. Kruthivas, President-Elect of Credai Chennai, housing sales have already declined by nearly 30%, and rising construction costs could further dampen buyer sentiment. He noted that developers are struggling to manage escalating expenses while maintaining project viability and employment levels within the industry.
To address the issue, Credai Chennai plans to submit a representation to Tamil Nadu’s Minister for Natural Resources, Minerals and Mines, T.K. Prabhu. The developers’ body is seeking measures to ensure uninterrupted supplies of legally sourced construction materials, prevent speculative price increases and expedite approvals for compliant mining and material supply operations.
Industry associations have also highlighted the challenges faced by small and medium-sized developers, who often lack the purchasing power and supply arrangements available to larger infrastructure companies. They argue that major infrastructure projects are absorbing a substantial portion of the output from authorized quarries, leaving limited supplies for residential construction.
Engineering and contractor associations have echoed similar concerns. They maintain that while action against illegal mining is necessary, alternative supply mechanisms should have been established before shutting down unauthorized quarries. Contractors involved in fixed-price projects are particularly affected, as they must absorb rising material costs without being able to revise contract values.
Meanwhile, activists supporting the crackdown on illegal mining have urged the government to maintain strict enforcement and explore alternative measures to improve material availability. State authorities have acknowledged the concerns and indicated that discussions are underway to find a balanced solution.
With construction costs continuing to rise and supply constraints persisting, industry experts believe the housing market could witness further price increases unless swift policy interventions help stabilize material availability and costs.
