Could More People Afford to Buy Homes in India If Construction Materials Cost Less?

Developers and purchasers could profit from the recent measures announced by the government to reduce import levies on steel and plastic, as well as moves to enhance the supply of cement.

But will it really improve matters for the prospective homeowner?

The real estate industry has been pushing for measures to help developers cope with the rising cost of land and buildings. Cement and steel prices have been rising recently, but the government has taken steps to ease the burden on developers and consumers by lowering import levies on steel and plastic and increasing the availability of cement.

The housing market is expected to benefit from these steps, according to experts. Commercial and residential property values will also benefit from this change.

Reddy M, CEO of a reputable real estate development firm and senior vice president of an independent self-regulatory authority, claims that the decreased cost of petroleum would lead to more effective logistics, greater availability of raw materials, and increased housing affordability. Since consumers are already struggling with rising inflation, it would be in everyone's best interest if property developers passed these savings on to the final customers.

EXACTLY WHAT WE NEEDED:

Shyam Pradig, a real estate developer, thinks the ruling couldn't have been more timely. Since the second quarter of 2022, home purchases in Mumbai have slowed. One possible explanation is that potential buyers rushed to close on their homes before March 31, 2022, to avoid the higher stamp duty rates that went into effect on April 1, 2022. Sales of homes that were expected in April and May of 2022 actually occurred in March of that year, as noted by Pradig. Because of rising prices, Pradig says buyers are becoming more price-conscious, especially for more moderate and entry-level homes.

Inflationary pressures are being reduced, which is a positive step.

The property market has seen signs of inflation's impact in recent months. Homebuying is affected by inflation in two ways, according to property developer Raju Adhyaksh. First, the impact on the buyer's income may cause them to reconsider purchasing a property. Second, homebuying prices and availability have been considerably impacted by the sharp increase in building costs. The housing market will pick up steam if the rising cost of development can be reined in.

This goes beyond what has been done to curb inflation and building material costs, according to developer Reji John. Developers have less and fewer resources to provide discounts to accommodate the needs of homebuyers in light of escalating building expenses. Imagine the good effect of a 50% cut in stamp duty, as was done in 2020,

" Reji says, "if a slight rise in stamp duty rates may encourage individuals to purchase houses in big numbers by March-end this year."

EFFECTS OF PRICE INCREASES ON CONSTRUCTION

There was a significant number of purchasers who defaulted on their payments during the lockdown, claiming Covid 19 as the reason and asking for early possession.

In his own words, Bharat Malik, developer and founder of a real estate agents group in Thane, says, "The sharp spike in the pricing of building material is a recognised concern among purchasers as well as developers." Many homebuyers, particularly those who have reserved properties in ongoing building projects, worry that they won't be able to move in when and how they expected.

That was a major worry for prospective purchasers and construction crews alike.

Developers have had it rough over the last several years as a result of rising prices.

Manek argues that if this measure is taken, it will assist with cost management and, in the long run, benefit customers.

Conclusion:

Even while the government's decision to reduce import charges is very much appreciated, it is not assured that the savings would be passed on to consumers.

An agent named Suhas Noel claims that "in the, luxury home category in the western suburbs, there has been no major shift in house demand as a consequence of this move."

After the first lock-down in 2020, demand for houses surged as a result of the decrease in stamp duty levies and the historically low interest rates on home loans. Due to growing prices and interest rates, only individuals in urgent need of a new residence are expected to make purchases in the coming months.

Prices in several local marketplaces, and notably in Mumbai, are at an all-time high and must be reduced. Noel's conclusion is that the cost savings may or may not be passed on to the property buyer.