If you have been following the property prices in the Zirakpur and Mohali region after the lockdown opened you must have noticed that almost 100% of the builders have increased the prices of their inventory.
I had written a short update about it a few days ago.
This price increase, in my view, has been driven by a host of factors.
Let me try and list down a few reasons for the readers:
Raw Material costs have gone up
In the past few months, the cost of raw materials such as steel, cement and wood has gone up. The builder’s input costs have risen accordingly.
In a period of just four months, steel prices have almost doubled from Rs 45000 in November 2020 to Rs 72000 in March 2021.
The prices of other building materials have increased by 40 to 50% in the last six to eight months.
Market is steady and the demand is good
It is rare for the demand to dip in this region anyway.
Seasonal variations do occur but the market sentiment is positive in the long term.
After the lockdown opened the pent up demand resulted in good sales. As the economy picks up, the coming year is also expected to be good for the real estate sector.
Due to the demand not dropping the prices have kept steady and the builders have not felt a need to drop prices.
Labour rates have gone up
Labour non-availability was one of the most glaring issues that the real estate industry faced after the lockdown opened.
The non availablility issue is more or less sorted now but the costs of employing labour have gone up.
Construction is moving at a fast pace
Another factor for the price increase is quite natural and has nothing to do with the increase in input costs.
As the construction moves ahead the builder will increase the price of the apartments. A typical real estate product may undergo up to 6 to 8 rounds of price appreciation from the time the first brick is laid to the time it is declared ready to move.
A word of caution
While I understand that the costs have gone up and everything, I still am not convinced about the pricing that some products in the market are commanding,
I seriously believe some prices especially in the Mohali area are overpriced but that is a discussion for another day.
It is important for the buyers to identify good quality construction, trusted developers and futuristic amenities if they want their investment in a house to bear rich fruits.
If the prices have increased should you make a purchase?
In a few years time, it will be very costly for a middle class professional to buy a decent apartment on the airport road for example.
The price appreciation that has happened is nothing as compared to what’s coming next.
The airport road’s connection to panchkula will be completed and it will breathe a whole new life into the region.
People who make an investment in an apartment on the airport road Mohali will definitely be buying into a great location with lots of scope for future developments.