Sharp rise in prices and interest rates have negatively impacted the property sector. In one study, the slowdown in the property sector is expected to reduce its contribution to GDP to less than 8% in 2011-12 to 8.1% in the last fiscal year.

According to a survey by industry body ASSOCHAM between the companies, the slowdown in the sector, especially in the unregulated price of the main peak of the building along with widespread labor shortages at all levels.

“Building the home is pushing strong and steady increase in prices of cement, steel bars, bricks and other raw materials, which have increased more than 30% since 2009,” ASSOCHAM said in a statement.

The industry also faces a severe shortage of nearly 40% of skilled workers in the building. For this reason, construction projects are delayed or canceled across the country, the survey found, “Current trends in the construction industry in India.”

Input costs of the construction workforce has grown by over 30% over the past two years, according to the study. “Inflationary pressures lead to an abnormal increase in prices of food and basic living costs have increased wages upwards. Moreover, the impoverishment of workers migrating to a better local employment opportunities generated by government agencies has led labor shortages and rising costs, “said DS Rawat Secretary General of ASSOCHAM.

Steel, concrete and labor are key components, and they alone are nearly 75% of the total construction cost, says research. “The cost increase is mainly due to growing global demand for goods and goods in addition to increasing transport and energy costs, which are collectively responsible for such an excursion in the field,” says Rawat.

The study is based on a survey of about 1,500 players in the industry, including contractors, builders, material manufacturers, retailers and real estate consultants to evaluate the impact of soaring prices of construction and work deficit on real estate in India and the construction sector. The study was conducted at Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi NCR, Hyderabad, Kolkata, Lucknow, Mumbai and Pune, between April and August.

About 60% of respondents said rising construction material costs spiral significant has been a lot of pressure on the project, who are struggling to keep their margins intact. “Manufacturers of building materials and merchants not only is the erosion of profit margins, but its shares have lost market value of 15% to 20% in four or five months,” the study said.

During April-June 2011, that revenue growth in the property sector by 8.7% over the same period last year. But due to rising input costs and interest, profits fell by 19.5% over the comparable period last year.

Over 25% of respondents said the jobs crisis is the biggest obstacle to their development as they are struggling with shortages of skilled labor, as the various government projects, such as Jawaharlal Nehru National Urban Renewal Mission ( JNNURM) and the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) are encouraging migrant workers from states like Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan go private employment.

“Technology as prefabricated buildings, brick technology is not a viable solution to quickly build and counter labor crisis faced by the industry is considering a labor-intensive nature of construction practices in different parts of India,” says Rawat.

In addition, rising prices, a sharp increase in lending rates of banks has severely affected the property sector, most of the construction material manufacturers and traders said, adding that rather than going to bring the cost of raw materials to final consumers, are cut in production.

Approximately 55% of respondents representing the real estate business said that access to capital is becoming difficult day by day as banks reduced their loans Realty players forcing them to take money from expensive sources. As the government and the RBI has placed restrictions on the property sector in raising foreign funds, are forced to borrow at interest rates.

According to a study paper, Edelweiss, actually more than eleven players in the country has a total debt of about Rs 38 500 crore. Since interest rates are rising, many companies are finding it difficult to meet the debt interest rate.