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Cost of constructing house declines by 20 percent - Naveed Yaseen - 12-26-2008 08:34 AM
By Nauman Tasleem
LAHORE: The cost of constructing a house has decreased by more than 20 percent due to declining fuel prices, less demand for raw material and high unemployment rate in the unskilled labour.
The contractors are of the view that that it is an ideal time to construct a home, as the prices of raw material are the lowest in two years. However, they said that their businesses have been disturbed due to on going financial crunch.
The constructors told Daily Times on Thursday that a 5-marla double-storey house, which some three to four months ago, was built for Rs 1.8 to Rs 2 million, now could be constructed for Rs 1.4 to 1.6 million. They said that there are multiple reasons in decline in construction cost, which includes considerable drop in transportation charges due to decrease in petroleum prices, decline in steel, iron, sand and crush prices.
The maximum decrease of 40 percent has been seen in iron prices, 33 percent in sand prices, around 20 percent in labour, 9 percent in crush prices and four percent in cement prices.
A private constructor, Ilyas Ashraf said that besides raw material the labour cost has also dropped, as there is unemployment in the sector. He said that he used to construct and sell around six to eight homes in three to four months but for the last six months this rate has dropped. He said that the labour demand has come down due to decline in construction business and it resulted in a decrease in the wages of labourers. "A labourer who used to get Rs 300 per day is ready to work for Rs 250, a decrease of at least 16 percent," Ashraf said. "Around Rs 400,000 to Rs 500,000 can be saved in the construction of a 5-marla and 10-marla house," he said.
Another constructor Wazir Ali said that the cement and iron prices have also declined, which are the major items used in the construction. "The iron and steel play are an important determinant of the total cost of constructing a house and the rates of both of these things are down these days," Ali said.
According to Statistical Survey of Pakistan, the existing number of housing units in the country stands at 19.21 million. Out of these units, 6.03 million are in urban areas while 13.18 million in rural areas.
Out of every hundred 9 units in the country are rented out, 81 are owned and 10 are rent-free. In urban areas, the ratio of rented house is more as compare to rural areas. In urban areas, every 23 units are rented out, 69 are owned and 8 are rent-free. The percentage of rented houses in rural areas is 2 and while 87 are owned and 11 rent-free.
http://www.dailytimes.com.pk/default.asp?page=2008\12\26\story_26-12-2008_pg5_3