Real estate prices are witnessing a correction but there has been no let up in the high cost of construction. The prices of almost all building materials have risen sharply in the past few years. Bricks account for about 5% of the total construction cost. Their prices have risen by an average 10% a year since 1992.
Then: A standard brick used in construction cost 60 paise in 1992.
Now: It costs Rs 2.80, a 365% rise in 16 years.
Then: If the price of bricks keeps rising at the same rate, one brick will cost Rs 13 in 2024.
For people who are building houses, it is a triple whammy. One, despite the correction, land prices remain high. Two, prices of basic materials such as steel and cement have zoomed. And three, interest rates on home loans have shot up from 7-8% in 2005 to 12% now.