Home prices may inch up in the next four months to six months on the back of a cost push, firm demand and lower inventory, breaking out of the stagnation witnessed over the last several years and testing the nascent recovery in the country.

The amount of increase will depend on multiple factors such as location, quality of development, reputation of the developer and buyers’ appetite to absorb the hike. Builders feel a 5-10 per cent rise can be expected.

The increase will be more pronounced in the affordable segment, which offers properties in the price range of up to Rs 50 lakh, while it may not be as significant for the premium and luxury segments.

Builders say there has been a Rs 350-400 per square foot rise in construction cost from January 2020 onwards, mostly on account of steel and cement prices.

“Prices have already started moving up in the last six months and the trend could accelerate going forward,” Sushil Mohta, president of realtors’ body Credai (West Bengal), said.

Buyers who have signed an agreement for sale would not be impacted by this hike as the real estate regulatory authority does not allow escalation clauses in the contract. However, prices may go up in unsold apartments and new projects, Nandu Belani, president of Credai Bengal, said.

While realty prices are market driven, builders felt the need to apprise the market of the impending price rise.

Sidharth Pansari, owner of Primarc and a Credai member, said the rise would not be in one go and it would depend on several factors, including the stage of development of a project.

“All we are saying is that there is a cost push on account of raw material, labour etc and it will be passed on progressively,” he said.

Market sources say builders were hoping that buyers would not shy away from higher prices despite the economy being barely out of the woods and income yet to go up significantly. They are banking on a low mortgage rate that would allow buyers to shell out a little more for an apartment.