- What CREDAI says about the ongoing war
- Impact due to cement
- Impact due to metals
- Evaluation by CREDAI on housing prices
The ongoing war between Russia and Ukraine may have an impact on Indian housing prices. Real estate developers have expressed concern about rising input costs as a result of rising geopolitical tensions between Russia and Ukraine. According to news reports, the conflict between Russia and Ukraine grew primarily as a result of the latter’s alliance with the North Atlantic Treaty Organization (NATO). Because of the conflict between Russia and Ukraine, the prices of a variety of commodities, including oil, cement, LPG, Diesel, and wheat, will rise.
If the price of cement and other building materials rises, so will interest rates in the real estate market in the coming months. This is an excellent illustration of how foreign geopolitical tensions affect the real estate market and mortgage rates.
What CREDAI says:
Harshvardhan Patodia, president of the Confederation of Real Estate Developers’ Associations of India (CREDAI), the industry’s governing body, has predicted that housing prices will rise in the coming months due to an increase in raw material prices.
Crude oil prices are rising as a result of the current geopolitical crisis. The stock market has plummeted around the world, which will undoubtedly have an impact on a variety of other industries.
Housing prices in the real estate sector may rise in the coming months as raw material prices, such as cement and metals, rise.
Impact due to cement:
The cement manufacturers in India may struggle further as a result of the war crises. They were already under pressure due to rising energy and raw material costs, and this crisis will exacerbate the situation because the price of gasoline and diesel will impact delivery and manufacturing costs.
The burden will be passed on by the cement manufacturers to the developers because 60-65 per cent of their business is either directly or indirectly linked to crude prices. Industry predictions indicate that price of housing projects will hike.
Impact due to metals:
Because Russia is currently one of the world’s leading producers of aluminium, metal prices could skyrocket. And, when combined with other metals, aluminium creates a strong and durable alloy, which is widely used in the modern construction industry.
Russia and Ukraine are also the largest producers of metals such as nickel, copper, and iron.
Evaluation by CREDAI on housing prices:
CREDAI conducted a housing price assessment in January. According to the report, 21% of manufacturers predicted that the cost of housing would rise by 30% this year. Approximately 60% of real estate developers predicted a 20% increase in property prices in the coming months. Approximately 35% of real estate manufacturers predicted a 10% to 20% increase. Simultaneously, 25% predicted that real estate property prices would rise by up to 10%.
This evaluation was conducted after discussions with approximately 1,322 manufacturers from Delhi, Mumbai, Bangalore, and other major cities. With the current conflict between Ukraine and Russia, the expected increase in the real estate sector could be even greater.
Although global concerns about the Omicron variant have subsided, the growing imbalance between demand and supply has impacted investor sentiment around the world. Crude oil prices are critical to the growth of any industry, regardless of its involvement with the real estate sector.
While developers expect to have to raise housing prices, they are unable to specify a specific amount or range because the situation is still fluid, and the final decision will depend on how long the conflict between Russia and Ukraine lasts and how other major countries react to it.