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New Delhi: Housing prices are likely to rise in the medium to long term as construction cost has gone up by 10-20% due to a sharp increase in prices of cement and steel, realtors body Credai said on Thursday.

Addressing a virtual press conference, Credai Chairman Satish Magar said housing sales have fallen “drastically” since April because of the onslaught of the second wave of the Covid-19 pandemic.

He, however, did not give the quantum of the fall in housing sales expected during April-June compared to the previous quarter.

On housing prices, Credai President Harsh Vardhan Patodia said the prices of cement and steel have gone up sharply in the last one year.

“In the medium and long term, prices of real estate are bound to go up,” he told reporters.

Patodia said the developers will be forced to increase the price as they are not in a position to absorb the rise in the cost of construction material.

Patodia said prices for existing customers will not be raised, but rates may go up for new sales.

The association has written several times to the government to control steel and cement prices. It has also filed complaints with fair trade regulator CCI (Competition Commission of India).

Credai President-Elect Boman Irani said the construction cost has risen by about 15% because of a sharp hike in cement and steel prices.

However, he said, a rise in property prices does not mean increased profit margins for developers. “Our margins are getting squeezed,” he said.

Irani said the impact of the second wave of Covid on real estate has been more pronounced because everyone suffered in some way. “The second wave hit fast, hard and hit home,” he said.

The Credai chairman said the government needs to step in and announce measures to bail out this sector, which is crucial for the overall economic growth.

He suggested that the government should allow restructuring of developers’ loan, and a moratorium on loan to boost liquidity in the sector.

Last month, Credai had said that cement and steel rates have increased by 40-5% in the last few weeks and alleged price cartelisation and unfair trade practices by the manufacturers.

The association had written a letter to the Minister of Housing and Urban Affairs Hardeep Singh Puri, seeking his intervention in the matter.