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Factors Affecting the Cost of Construction of a House

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Factors Affecting the Cost of Construction of a House

Home isn’t a place, it’s a feeling. People save their earnings for their whole life just to have a house of their own, which they can call home. It’s like putting money away for the future. But, still with the growing population, it has become even more difficult to have a home in the cities. Property rates in all parts of India are increasing exponentially.

A report from The Economic Times stated that the average cost of construction per sq ft in Mumbai is highest in the country. Among the metros too, the lowest-ranked cities are Hyderabad and Chennai, where the average cost of building is about 10 percent less than in Mumbai. This cost of construction will vary from city to city.

Hence, if you are planning to build a house in any part of India, you should be aware of the developmental and all other costs associated with the cost of construction of a house.

About construction industry

After agriculture and the retail sector, the construction industry in India is one of the greatest employment producers in the country. The real estate industry is one of the primary drivers of private sector involvement in the built environment of the country as infrastructure is the very basic pillar in determining the development of the country. It has a strong relationship to the construction industry, which has significant links to sectors such as cement, steel, chemicals, paints, tiles, etc. The construction industry also has a strong connection to the real estate industry.

Why are we seeing a rise in the cost of construction?

  • Growing population

India is the second highest populated country in the world and with increasing population, industrialization and urbanization is rapidly increasing. The growing population now needs to be accommodated in urban areas thus increasing the property costs, land costs and so on.

  • Rise in cost of raw materials

The cost associated with raw materials like the price of steel, cement, bricks and so on has been on rise by about a 10-12% rise per year. Since these raw materials constitute the most part of construction of a house, the average cost of construction is also on rise by about 10-12% each year.

  • Increasing labor cost

India has a large and diverse labor pool. The majority of the working population is then engaged in these informal segments. Still, the labor costs vary from region to region depending on the living costs associated with the region.

All these factors put a huge impact on the cost of construction per sq. ft.

How to reduce the cost of construction of a house in India?

  • Choose the Right Plot

Building a house starts with the plot level. Choose an even, road-level plot. If the plot is uneven, rocky, or considerably lower than the road level in front, you may need more material or equipment to fill and level it, which may increase building costs. Also, don’t forget to get a soil test done. Building the foundation and footings will be quite expensive if the soil is poor or the area is in loose soil.

  • Pre-plan your design

Hiring a professional costs money, but it saves more on house construction. You might think that you can put your own design and move forward slowly, but an engineer and architect will better understand the technicalities associated with the construction of your house, be it floor plan or any other layout. Unnecessary construction delays cause most cost overruns. After choosing a contractor or architect, write a contract immediately. Make sure this agreement specifies who gets the building material, costs, project completion and payment dates, and penalties for delays. This whole process not just saves you money but also time.

  • Electric and water supply

Consider these things before purchasing a plot. Check to see if an electric and water connection is available near your property. Otherwise, you must apply for a separate poll connection near your home and install a separate plumbing pipe to your property, both of which are costly and will add to the cost of construction of your new house.

The real estate industry has encountered a significant transformation over the past few years.

This sector has been energized by the expansion of municipal boundaries, the sustained demand for housing, the relaxation of regulatory bottlenecks, and the influx of foreign investment. Even though residential real estate demand has slowed in major cities such as Delhi, Gurgaon, and Mumbai, residential property prices continue to rise.

In Mumbai, other sectors including commercial, industrial, and retail have experienced a significant uptick in space utilization and construction activity. Overall, the cost of construction of a house is related to many factors depending on the area where you are deciding to construct your house. Local government taxes and other regulations impact these constructions a lot. So, the average cost of construction per sq ft might vary from place to place. Just be cautious and plan well before to reduce the overall cost of construction of a house. You can also check out our article where we have estimated the average cost of construction of a house.

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