Construction cost up by 20% in two years in Madhya Pradesh

A builder Saurabh Mishra said, “There has been 15 to 20% rise in construction cost in the last couple of years. The cost of iron rod (sariya) has gone up from Rs 52 to Rs 83 per kg after the Russia-Ukraine war. The cost of cement has also gone up by 30% than pre-Covid days.

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Even as the state government is claiming to provide a house to every family in the state by 2024, construction of a house by a middle class or lower middle class family is becoming more & more difficult due to sharp increase in cost over the last two years.

A builder Saurabh Mishra said, “There has been 15 to 20% rise in construction cost in the last couple of years. The cost of iron rod (sariya) has gone up from Rs 52 to Rs 83 per kg after the Russia-Ukraine war. The cost of cement has also gone up by 30% than pre-Covid days.

White cement, sand, sanitary goods, every building material has seen a steep rise in prices over the past few years. Following Covid, the labour charge has also gone up considerably as majority of migrant labourers had gone back home during pandemic and have not returned so far. Hence, we have to employ local labourers, who are costlier.”

When asked by how much the cost has gone up in terms of area of construction, he said, “In an apartment, the construction cost which was Rs 900 to Rs 1000 per square feet earlier has now gone up to Rs 12000 to Rs 13000 sq feet. So, if a person was spending Rs 10 lakh on construction of his house before Covid, is now spending Rs 12 to Rs 13 lakh”.

Manoj Singh Meek of the Confederation of Real Estate Developers’ Association of India (CREDAI) said that the construction cost has gone up by 15 to 20% in the last couple of years.

“There are so many factors, which affect the construction cost directly or indirectly. Prices of steel, sand and cement started rising when petrol and diesel prices were going up. Petrol and diesel prices may not be rising any more, but prices of other things which rose at that time have not come down.

In fact, companies producing steel and cement have formed a “consortium” and they are selling their product at the price decided among themselves. There are several big players in the field of construction because the government is also spending a lot in housing and infrastructure development and big companies do not mind paying the price decided by the consortium, but small builders and individuals constructing their house are feeling the pinch of “inflated” prices of building materials.

The labour cost has also gone up. While we calculate the rise in prices of building materials or cost of construction, we tend to forget the taxes on building materials. There is 18% GST on building material like steel and cement and higher their prices, more the GST,” he said.