Will the Prices of Raw Materials Rise Due to RERA?
Jun 03, 2017 Real Estate News
The most awaited Real Estate (Regulation and Development) Act, 2016 came into full force on 1st May 2017. People are now waiting to know what will be the effect of RERA in the raw material supplies. Will the prices go up?
According to the industry experts, it is expected that the prices of raw materials may go up keeping in mind that the developers will not be able to launch projects until all the approvals have been received. This will reduce the number of launches which will increase the cost of raw materials.
The president of Confederation of Real estate developer’s association of India (CREDAI), Jaxay Shah said that the new launches of the projects will get affected due to stricter compliances. With the demand rising and the short supply will result in short supply temporarily.
According to the developers, the conversion of agricultural land into non agricultural takes about 4 to 6 months. Then the development and passing of the plan take another 3 months and around a month will be taken to get all the necessary approvals from the authorities. This will push the projects at least 10 months behind.
The treasurer of the CREDAI says that the delay in the launch of the projects will be sold because of all the necessary approvals they will have to get before launching the project. The demand in the market has risen and if the demands are not met with the supplies then the short supply will lead to the rise in prices.
Experts also say that the prices will go up because the developers will now have to put the 70 percent of the money they get from the buyer in the Escrow account which they cannot use to fund any other project. The developers will have to the full amount for buying the land and pay the registration fees. The cost of construction will increase and therefore the price of the properties.
Limited supply while in the rise of demand will increase the prices temporarily but it will stabilise in long run.
RERA is welcomed by the developers and the buyers both as it aims to decrease the fraudulent practices of the developers and help in strengthening the ties of the builders and the buyers. Most buyers used to put their dreams of owning a house because of such practices and high prices. This will come to an end will increase the demand among the potential buyers.
According to the industry experts, it is expected that the prices of raw materials may go up keeping in mind that the developers will not be able to launch projects until all the approvals have been received. This will reduce the number of launches which will increase the cost of raw materials.
The president of Confederation of Real estate developer’s association of India (CREDAI), Jaxay Shah said that the new launches of the projects will get affected due to stricter compliances. With the demand rising and the short supply will result in short supply temporarily.
According to the developers, the conversion of agricultural land into non agricultural takes about 4 to 6 months. Then the development and passing of the plan take another 3 months and around a month will be taken to get all the necessary approvals from the authorities. This will push the projects at least 10 months behind.
The treasurer of the CREDAI says that the delay in the launch of the projects will be sold because of all the necessary approvals they will have to get before launching the project. The demand in the market has risen and if the demands are not met with the supplies then the short supply will lead to the rise in prices.
Experts also say that the prices will go up because the developers will now have to put the 70 percent of the money they get from the buyer in the Escrow account which they cannot use to fund any other project. The developers will have to the full amount for buying the land and pay the registration fees. The cost of construction will increase and therefore the price of the properties.
Limited supply while in the rise of demand will increase the prices temporarily but it will stabilise in long run.
RERA is welcomed by the developers and the buyers both as it aims to decrease the fraudulent practices of the developers and help in strengthening the ties of the builders and the buyers. Most buyers used to put their dreams of owning a house because of such practices and high prices. This will come to an end will increase the demand among the potential buyers.
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