BENGALURU: The housing market in Bengaluru is facing a storm of rising costs on multiple fronts, leaving buyers to compromise on things like interiors or give up on their dream for now.
Office-bearers of the Confederation of Real Estate Developers Associations of India (Credai) put the rise in construction costs at 11% this year alone. The reason: A steep hike in labour wages and transportation fees.
Developers say mandatory regulations such as rainwater harvesting and other environmental norms have further added to construction costs. High home loan interest rates, currently hovering around 9%, are compelling many buyers to either scale down expectations or turn to affordable options in suburban areas.
Leelavathi Yadav, co-founder of SVK Constructions at Thindlu, said, “Even though builders are adopting strategies like offering clients tiered choices — premium, mid-tier, and basic — based on material quality, a slight burden is passed on to buyers, making them settle for semi-furnished homes to stay within budget. Many are now opting to purchase land in suburban areas such as Sarjapur or off Mysuru Road, away from the city where prices are relatively affordable, and build homes at their own pace to manage costs.”
Builders say they are also increasingly adopting cost-efficient construction methods such as dry-fix system, which minimises labour dependency and shortens project timelines to offset the burden on homebuyers.
Monnanda Appaiah, COO at Wienerberger India, a clay building material solution provider, said, “New regulatory mandates like rainwater harvesting and environmental norms have added to expenses. Although materials like steel and cement have stabilised, transportation costs for materials like cement remain high.”
“Additionally, the high cost of land, coupled with rising interest rates on home loans — currently about 9% compared to 7% two years ago — is deterring many mid-segment buyers. Homebuyers are either compromising on home specifications or opting for more affordable options in suburban areas.”
Kishore Reddy, CMD of Mana Projects, said, “Much as costs of material have gone up, it has also impacted project timelines. Costs in this sense are a common factor that make developers reconsider their plans, renegotiate contracts, or look for another supplier — a process that inevitably slows down the project.”
Suresh VP, vice-president of Credai, said while developers are attempting to absorb some of the rising costs, they are unable to shield buyers entirely. Passing on the full extent of increase is met with resistance, especially from middle-class buyers who find it increasingly difficult to afford housing. The problem is particularly pronounced in the affordable housing sector, where high land costs and a lack of govt concessions make it nearly impossible for developers to maintain low prices.”
According to Suresh, without measures such as tax breaks, uniform stamp duties, reduced land prices, and infrastructure support, the dream of affordable housing for all remains far from realisation. “Immediate action is required to ensure housing remains accessible to the broader population,” he added.
Daily wages for masons have nearly doubled, with head masons earning Rs 1,200 a day compared to Rs 650-700 a year ago. Other labourers now cost Rs 750-800 a day with food included, up from Rs 400-450 a year ago. Transportation costs have also surged; previously, small orders like 3-5 bags of cement incurred no delivery charges, but now they can cost Rs 100-200 extra per trip
— Leelavathi Yadav | co-founder of SVK Constructions, Thindlu
The cost of essential building materials like cement and manufactured alternatives has surged 10-15% due to limited availability of natural resources such as sand and increased reliance on synthetic and pre-fabricated materials. Moreover, higher taxes, elevated govt charges for plan sanctions, and import restrictions have further escalated expenses
— Suresh VP | vice-president, Credai
Source Homevior.in
