Dreams of building a house slowly crumbling

The construction industry has been heavily impacted by a mixture of inflation and cartelization

LAHORE:

To have a home one can call their own is the dream of many in the country and given how pricey construction is they spend decades saving up just to be able to be free of the trials and tribulations that come with renting an abode.

As inflation has skyrocketed and the construction industry has seen an influx of investments aided by recent amnesty schemes, which in turn has triggered an increase in prices, it seems that the dream to build or own a home is slowly slipping away from the grasp of Punjab’s poor and middle class.

A market survey conducted by The Express Tribune estimates that the cost of building a new house in Lahore has increased by more than 50% in the past year; while the cost of buying a house has seen a rise of more than 20%. These estimates, which are based on the prices of raw materials, show that by April 2022, the price of steel ranged from Rs 160,000 to Rs 170,000 per tonne.

However, after a dramatic increase in electricity and diesel prices, in a short span of just two months, the prices presently stand at Rs 225,000 per tonne; whereas branded steel will cost the customer Rs 245,000 per tonne.Similarly, the price of a sack of cement, which was being sold at Rs 565 in June last year, is now being sold for anywhere between Rs 1,100 to Rs 1,150. It is pertinent to note that retailers were in unison whilst alleging to The Express Tribune that the true price of a cement bag should be around Rs 740 but cartelization had triggered an unjustifiable increase. Haji Tahir, who runs a construction items business in Lahore, said that in the last three months prices have increased ten-fold for some items.

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“If you order cement and ceramics today, you will be quoted one price but when you come tomorrow, the rates will have gone up.” It is not just cement, The Express Tribune learnt that rates for first grade bricks have gone up from Rs 11,500 per 1,000 to Rs 14,500 per 1,000. It was further learnt that the price increases have also had an impact on the labour employed to build houses.

For instance, a contractor who used to charge Rs 230 per square foot last year now charges Rs 500; a mason’s daily wage has gone up from Rs 1,800 to nearly Rs 2,500 per day; and construction helpers who used to charge Rs 1,000 per day now demand Rs 1,400 per day. All in all per The Express Tribune’s findings until a few months ago, the grey structure of a new house which was constructed at a cost of Rs 1,800 per foot now costs Rs 2,800 per foot - a 56% increase.

“The current construction market situation is beyond comprehension. The common man can surely kiss all dreams of building a house goodbye for now. Now we just have contractors building houses to make a profit,” Tahir remarked. With contractors flipping built houses for a profit, that too takes a toll on the market, as per Omar Pervez, a property dealer based in the city. Pervez informed that contractors citing the increase in prices of construction now demand up to 30% for newly built houses, which in turn inflates the entire housing market.

“In recent times I have seen that people are forced to opt for 3, 5, or 7 marla houses because they have been priced out of bigger houses due to artificial increases. However, soon these houses will be out of the reach of the common man as well with new taxes being imposed on the sale and purchase of houses in the recently proposed federal budget,” Pervez told The Express Tribune.

Published in The Express Tribune, June 28^th, 2022.