A rampant spike in building material prices has hit the construction industry hard and left middle-income people unable to afford apartments.
Rising prices of major components of building materials have increased the cost of construction, and as a result, prices for apartments and commercial units have also increased.
The Deputy Chairman of the Real Estate and Housing Association of Bangladesh, Kamal Mahmud, said that due to soaring prices of building materials, especially rod and cement, the price of the foot square of apartments had increased from 1,000 to 1,400 Tk.
The recent spike in raw material prices in the construction sector and the Russian-Ukrainian conflict were the main reasons for the spike in building material prices, he said.
He said many real estate traders have stopped taking on new apartment projects and have also slowed sales due to rising building material prices.
Before the surge, apartment prices in Dhaka city were already hard to afford for middle-income people and beyond the ability of low-income people. A further rise in prices has left middle-income people unable to afford their living space, industry experts said.
If rising prices cannot be controlled immediately, it will worsen the real estate market even further, they said.
They said a large number of construction workers could lose their jobs due to rising construction costs in the industry.
The executive director of the Bangladesh Policy Research Institute, Ahsan H Manur, told New Age that the spike in apartment prices goes beyond affordability for middle-income people.
After construction activities reopened following a Covid-centric disruption, the industry was unable to cope with the sudden surge in demand in the sector, causing building material prices to spike, it said. he declares.
Rising raw materials could also be one of the main reasons for the spiraling prices of building components, but the government needs to monitor whether the surge was rational or not, he said.
Mansur also said the skyrocketing construction costs would slow down the industry, which would also lead to job losses for construction workers.
Former REHAB chairman Md Abdul Awal, also managing director of The Structural Engineers Ltd, said soaring building material prices had thrown the industry into crisis.
He said his company stopped taking on new apartment projects and also suspended ongoing projects due to a huge price spike in all industry components.
If the government does not step up surveillance, the cost could continually rise, making it difficult for middle-income people to buy apartments and keep the industry going, he said.
Former chairman of the Bangladesh Construction Industry Association, Munir Uddin Ahmed, said the industry was on the brink of collapse due to the continued spike in prices of all kinds of building materials.
He said there were justified reasons, including a sudden increase in demand, an increase in raw materials and the war between Ukraine and Russia, to explain the spike in construction costs.
However, there could also be price engineering, he said.
He said the government should provide tax exemptions in the various materials industry to save the sector.
Market prices for almost all types of building materials have increased by 15-30% in recent weeks.
In March 2021, the market price of building materials began to rise sharply.
A price spike on several occasions, the price of wire rod stood at around Tk 62,000 per ton in January due to soaring scrap prices in the international market.
But the price of the rod rose to Tk 90,000-93,000 per ton amid the Russian-Ukrainian war.
Cement prices for all companies have increased by 50 taka in recent weeks at the retail and wholesale level.
The prices of bricks and stones also increased following the Russian-Ukrainian war.