Builders warn of 20% property price hike if industry issues remain unresolved

Builders and members of the National Real Estate Development Council (NAREDCO) have warned that property prices may increase by 20% from June 30 if the government does not solve the current problems faced by the construction industry. They said the situation could make it even harder for middle-class families to buy homes.

The builders said that the construction sector contributes about 7.5% to India's GDP. They claimed that rising costs of construction materials such as steel, cement, aluminum, and glass have increased project expenses by 20% to 40%. According to them, these price increases are linked to the ongoing conflict between the United States and Iran, making many projects financially difficult to continue.

The industry representatives demanded that the government reduce the GST on payments made to construction workers from 18% to 5% or remove it completely. They said that although the government has collected around ₹6,700 crore as labour cess, less than ₹500 crore has been used for workers’ welfare. They requested that labour cess collection be suspended until the existing funds are utilized.

Builders further urged the government to reduce land deduction rates under the Town Planning (TP) scheme from 40% to 10%. They also opposed the recent increase in deduction rates in smaller cities from 20% to 40%, saying it has added pressure on developers.

Simultaneously, they called for an increase in the Floor Space Index (FSI) from the current 2.7 to 4. They argued that developers effectively receive only 1.2 to 1.8 FSI after various deductions, which increases costs and affects housing prices.

The builders said delays in issuing TP approvals and announcing development plans are also creating difficulties. They emphasized that all builders must unite and collectively present their concerns to the government to find solutions and prevent further increases in property prices.