Ukraine Crisis: Housing Prices May Rise Significantly Due To Rising Component Costs!

Ukraine Crisis: Housing Prices May Rise Significantly Due To Rising Component Costs

A potential effect on the Indian real estate market could result from the ongoing conflict between Russia and Ukraine. Since markets around the world are experiencing uncertainty, this could have a substantial impact on the Indian real estate market.

According to press reports, the confrontation between Russia and Ukraine has gotten worse because of Ukraine’s alliance with NATO. Oil, cement, LPG, diesel, and wheat will all see price increases as a result of the conflict between Russia and Ukraine.

Prices in the real estate market will rise in the coming months if the cost of building materials such as cement and other essentials increases. Foreign geopolitical concerns have a direct impact on the housing market and mortgage rates.

Mortgage interest rates were rising before the crisis broke, but they reduced for a brief time after the Russian attack on Ukraine was reported to the world. According to mortgage industry analysts, rates are still expected to rise in the long term, despite the current drop. The unpredictability of war between large nations is the sole cause of this effect. Economic sanctions may be imposed as a result of the conflict between Russia and Ukraine, which might cause havoc on global commodity and energy markets.

CREDAI’s Housing Price Assessment

Housing prices were examined by CREDAI in their report released in January. Two-thirds of the manufacturers surveyed in the study predicted a 30% rise in the price of houses this year. In the following months, around 60% of real estate developers expected house prices to rise by 20%. 35% of real estate developers predicted growth of between 10 and 20%. 25% predicted an increase in property values of up to 10% at the same time.

According to this assessment, more than 1,322 manufacturers from major cities like Delhi, Mumbai or Bangalore participated in the research. Since Russia and Ukraine are at war, an increase in real estate prices could be considerably greater.

Cement Manufacturers’ Expected Price Hike

A rise in the cost of building materials like cement, as a result of the crisis between Russia and Ukraine, is expected in the coming months, according to CREDAI (Confederation of Real Estate Developers Associations of India).

According to CREDAI President Harshvardhan Patodia, the current geopolitical turmoil is leading to an increase in crude oil prices. The stock market has fallen drastically over the world, and this will have a significant impact on many other industries.

Metal Prices Are Expected To Rise Too

The current crisis in Russia and Ukraine will also have an effect on the cost of metals used in building a property. Russia is currently one of the world’s largest producers of aluminium, which could contribute to an increase in metal prices. And the current construction industry uses a lot of aluminium since it is a strong and durable alloy when blended with other metals.

Aluminium output could be disrupted by the current crisis, or sanctions from the West could lead to a noticeable increase in the metal’s price, depending on the circumstances. The price of Palladium may also rise, as Russia is the world’s largest exporter of this metal. Smartphones, tablets, and other electronic devices are all manufactured using metal.

Lastly, a substantial impact on Indian real estate is predicted as a result of the conflict between Russia and Ukraine. Prices of raw materials, transportation and energy will rise by 20-25%, putting additional pressure on developers. The price of the property will rise as a result of this increase in the cost of the raw materials. In addition, the Reserve Bank of India may raise interest rates on house loans in order to curb market inflation.