Real estate developers in Karnataka have decided to raise home prices by 3-8% from June 10, citing steep increases in the cost of construction materials and higher labour rates.

The price hike was “inevitable” because steel was dearer by 24% compared to its January level and cement prices were up 56% from the beginning of the year, Balakrishna Hegde, the president of the Karnataka unit of the Confederation of Real Estate Developers’ Associations of India said. The revision is the first of what could be a series of increases in the rates of residential properties.

CREDAI’s state chapter groups 124 real estate firms and includes the top property developers in Karnataka.

“Rising input costs have affected the cost of construction very harshly, increasing development costs by 20%-30%, depending on the stage of construction. Our members will increase prices by Rs 75 to Rs 500 per sq ft based on the location and the stage of construction,” Mr Hegde said.

The revision is the first of what could be a series of increases in the rates of residential properties as commodity prices escalate, pushed higher by soaring oil prices.

“What we are passing on is only a small portion of the increased cost of construction. We do not want to pass on the entire burden to at this stage, but will review the situation and take appropriate steps in the coming months,” he said.