Housing sector facing fresh crisis

Price hike of construction materials

Golam Mostafa Jibon:Though, the corona pandemic has started to ease a little bit, constant price hike of construction materials hits the housing sector in the country afresh.
Sources said, the world has not yet been freed from the clutches of the epidemic. Due to this, the world economy has suffered a lot. Like other countries, trade and commerce in Bangladesh has been negatively affected. Almost all businesses have collapsed. The financial crisis forced many to close down their businesses. Corona also affects the country’s housing sector. The price of construction materials has become almost doubled. Many businessmen are in dire straits with loans from banks. The epidemic, which lasted for one and half year, brought business to a standstill and construction works were halted. However, when the corona infection gradually subsided and everything started to return to normal, the housing sector began to turn around. But, the crisis continues to rise again as the prices of construction materials continue to rise. A large number of flats under construction are not being sold as the prices of rods, cement, sheets, angles, sand and stones, most important building materials, have gone up. However, the extra price is falling on the buyers. Flat buyers have to count the losses. Traders said, the price of flats and apartments will reduce, if the price of construction materials is reduced.
It is known that the price of rod has increased step by step and has now reached the highest level. Rods are currently being sold between Tk 75,000 and Tk 80,000 per ton. Prices of angles, sheets, sand, stone and cement have gone up. The increase in the prices of these construction materials has affected the housing sector. The economic downturn, prolonged shutdowns and temporary suspensions for new gas connections have exacerbated the crisis. Rod prices almost doubled last March.
In the last three to four months, good quality rods were sold between Tk 50,000 and Tk 55,000. But now, those are being sold between Tk 75,000 and Tk 80,000. Four months ago, thick sheets were sold at Tk 65,000 per ton, now they are being sold at Tk 115,000 with an increase of Tk 50,000. Thin sheets used to be sold at Tk 75,000 in the market, but now those are being sold at Tk 145,000 per ton. Three or four months ago, a ton of angle was sold for Tk 57,000. Now it is being sold between Tk 75,000 and Tk 80,000. Earlier, in the first half of 2007, the price of a ton of good quality (60 grade) rod went up to Tk 80,000. That was the highest price of rod in the country’s market so far. Later the price of rod came down to Tk 45,000.
Several traders in Old Dhaka said, all the shops remained shut down due to severe corona spread. Then as soon as we opened the shop, we saw that the price of everything was skyrocketing. Rod prices have risen due to rising of prices in the international market. However, there were no sales during the lockdown, so why did it increase at that time. It is still being sold at a higher price. We are general sellers. The production-level traders syndicate seems to have raised prices. Not only rubble, but also bricks, cobbles, stones, sand and cement have gone up in price. 1,000 good quality bricks are being sold between Tk 10,000 and Tk 11,000, second grade bricks are being sold between Tk 9,000 and Tk 9,500. But good quality bricks were sold between Tk 9,000 and Tk 10,000 earlier.
Three months ago, per bag of cement was available at Tk 390, but now it has increased from Tk 430 to Tk 480.
At present, every cubic foot of stone in Bholaganj is being sold at Tk 200 with an increase of around Tk 25. Indian black stone is being sold at Tk 185, up from Tk 20 to Tk 25, while Dubai stone is being sold at Tk 185. All types of sand are being sold at extra prices. At present, white sand is being sold at Tk 16 per cubic feet increasing about Tk 3, while red sand from Sylhet is being sold at Tk after increasing about Tk 5.
Regarding the increase in the prices of stone, sand, bricks and cement, the traders of Karwan Bazar said that, the prices remain lower during the time of burning bricks. During the monsoon, the price of bricks goes up. Now the cost of transportation has gone up, which is why it is becoming more expensive to bring sand and stones. Besides, the corona caused complications in stone import, which the traders could not overcome. The price of cement is now higher in the world market; therefore the price in the country has increased.
The increase in the price of construction materials has an impact on the real estate business. Many well-known companies are using low quality of sand and rods to cut losses due to rising prices of construction materials. New flats are being sold at higher prices, ordinary buyers have to count the losses. On the other hand, due to the high price of everything, the sellers are not able to sell the ready flats yet. Currently the number of unsold flats is on the rise.
Kamal Mahmood, Vice-President of the Real Estate and Housing Association of Bangladesh (REHAB) said, “Ordinary people are not able to buy flats as they are affected by the lockdown. For the same reason, sales in the housing sector have declined again. Moreover, the business is in a fragile state as the prices of every product of construction materials have gone up.”
“There is a multifaceted crisis in the real estate business at present. There is a problem in passing the plan as the Capital Development Authority (RAJUK) is working with half manpower. The file has been stuck there for a long time. This is creating a big obstacle; the work is not going to move forward. The cost of building flats and apartments has gone up due to rising prices of construction materials. If the price of these items comes down, the price of flats will also come down. Otherwise, it will be more difficult to meet basic housing needs,” he added.