Higher Construction Costs & Interest rates impacts Bengaluru's Housing market

The rise in construction costs was put at 11% this year alone, according to office-bearers of the Confederation of Real Estate Developers Associations of India (Credai) There was a steep hike in labour wages and transportation fees.

Rising costs on multiple fronts are leaving buyers to compromise on things like interiors or give up on their dream in Bengaluru.

The headhunter of the Confederation of Real Estate Developers Associations of India (Credai) estimates a 11% increase in construction expenses this year. There is a steep hike in labour wages and transportation fees.

Rainwater harvesting and other environmental norms have further added to construction costs, according to developers. The current high home loan interest rates of around 9% are leading many prospective buyers to either lower their expectations or look for more affordable alternatives in the suburbs.

A slight burden is passed on to buyers, making them settle for semi-furnished homes to stay within budget, even though builders are adopting strategies like offering clients tiered choices based on material quality, according to Leelavathi Yadav, co-founder of SVK Constructions at Thindlu. Many are choosing to buy land in suburban areas like Sarjapur or off Mysuru Road, away from the city where prices are affordable, and build homes at their own pace to manage costs.

Builders are increasingly adopting cost-efficient construction methods like the dry-fix system, which reduces labor dependency and shortens project timelines, to ease the burden on homebuyers.