Construction material prices surge, Chennai developers warn of costlier homes

A house for ₹1 crore may get 10% costlier, with prices of construction material going up by more than 23%. The hike, industry stakeholders said, is caused by an increase in the cost of gelatin and diesel, driven by the West Asian conflict, and a supply crunch following the closure of several unauthorised quarries.They warned that the steep increase in material costs could eventually be passed on to homebuyers.

The latest price revisions show spikes across a range of construction inputs, including ready mix concrete (RMC), M-sand and P-sand, aggregates and road-laying materials, according to real estate industry experts. The price of RMC has increased by ₹300 to ₹500 per cubic metre depending on the grade. The widely used M20, M25 and M30 grades have gone up by at least ₹500. The prices of construction aggregates have also increased by ₹300-₹500.

While the construction industry has welcomed the govt’s efforts to curb illegal mining, developers say the sudden reduction in material availability has created severe pressure on supply chains. Members of Credai Chennai said the housing industry had already been affected by the West Asian conflict.

“The housing sales are down by 30%. Jobs are at stake. People don’t want to invest in houses now. At this juncture, higher input costs would inevitably increase construction costs,” said P Kruthivas, president-elect, Credai Chennai.

Credai will be submitting a petition to minister for natural resources, minerals and mines T K Prabhu, requesting him to ensure uninterrupted supply of legally sourced construction material, prevent speculative price increases and expedite approvals for compliant mining and material supply units to restore market stability.

The developers’ body noted that small and medium-sized builders were particularly vulnerable as they faced difficulties in securing adequate material supply while large infra projects absorbed a substantial share of output from compliant quarries.

S Ramprabhu, chairman of the DTCP committee at the Builders Association of India, said there were more than 400 authorised quarries supplying quality construction materials “Their production is sufficient. So, the govt should step in and regulate the supply at the earliest,” he said.

E Srinivasan, president, Greater Chennai Civil Engineers Association, said that while he welcomed the minister’s crackdown on unauthorised quarries, he said that alternate solutions should have been ready before the closure of the quarries. “We enter an agreement with the customer and when the cost escalates it becomes difficult to convince them to pay more,” he said.

Rama Rao, president, Greater Chennai Contractor Association said they had given a representation to the govt after the price of bitumen shot up from ₹45,000 to ₹95,000 per ton. “We have to bear the cost increase of other construction material,” he said.

Meanwhile, convenor of Arappor Iyakkam Jayaram Venkatesan said there would be "heavy pressure” on the minister to back out of taking action against illegal mines. “He must stand his ground,” he said. “If supply reduces because of shutting down illegal mines, ban the rough stones and other construction material going to Kerala and use legally mined resources for Tamil Nadu to manage the supply.”

Minister Prabhu told TOI that discussions were on to address the issue.