Construction materials become cheaper, but there are few buyers, say dealersThe production of cement and iron rods has surpassed demand leading to excess supply.
House owner Ram Giri is happily watching prices of building materials drop since he started construction work on his dream abode one and a half months ago.
“The price of cement and iron rods has decreased significantly. Bricks, gravel and sand have become cheaper too,” he said. Giri, who lives in Kalanki, has been buying cement directly from the factory, and says that the price has decreased by Rs18 per bag.
With prices of construction materials falling by 30-40 percent, this is the right time to build your dream home; but dealers say that sales are below expectations.
According to Rabi Singh, president of the Federation of Contractors’ Associations, demand for construction materials has gone down by 30-40 percent with a drop in building activities.
“Construction work has slowed down as the government has not extended the date of projects. This has directly impacted the price of construction materials,” he said.
He added that construction activities had diminished since the flurry of rebuilding work after the massive earthquake of April 2015. "The production of cement and iron rods has surpassed demand, which has led to a fall in prices."
Giri said that suppliers had been offering him discounts due to excess stocks.
The Kathmandu-based construction material suppliers the Post talked to said that they had expected sales to rise because of the cheaper prices, but the number of customers has declined too. They felt that the government's home loan policy was the reason behind the drop in business.
"Prices of cement, iron and steel, gravel, sand and bricks have plunged by nearly 50 percent," said Shyam Lama, owner of Om Construction and Material Suppliers of Bauddha.
Birendra Balami, proprietor of Balami Construction of Matatirtha, said that prices of construction materials had decreased to a five-year low. “Prices usually drop during this season, but we did not expect them to fall this steeply,” he said.
Demand for construction materials goes down during the winter season, and prices decrease accordingly, he said.
Giri thinks that house building activities may have declined as there are not many auspicious days to lay the foundation stone this month.
Prices of construction materials started falling two months ago, he said. Most people borrow money to build their homes, and a tightened lending policy may have put off prospective builders, he added.
Lama, who used to receive 10-15 customers daily to order construction materials, said barely two to three people walk in through the door these days. “My daily turnover has shrunk to Rs8,000-10,000 from Rs100,000,” he said.
The price of gravel and sand, which used to cost Rs31,000 to Rs33,000 per truckload depending on quality, has fallen to Rs25,000, he said. Cement now costs Rs800 per bag, down from Rs1,000 to Rs1,150 previously.
You can buy A grade bricks for Rs14,000 to Rs16,000 per 1,000 units, compared to Rs18,000 to Rs19,000 before. Iron and steel that cost Rs90 to Rs92 per kg two months ago now cost Rs72 per kg.
Dhurba Thapa, president of the Cement Manufacturers' Association of Nepal, said that cement and iron and steel companies were in the red due to a huge gap between between demand and supply.
Increased capacity, cheaper charcoal and continuous supply of electricity has led to a jump in output, but demand is down. A slowdown in economic activities has also caused a fall in demand and prices.
Slowed capital spending by the government has also resulted in less demand for construction materials, said Thapa.