Construction Costs Surge Across Tamil Nadu as Material Prices Double and Labour Shortages Bite

Home construction costs are soaring across Tamil Nadu, with M-sand prices doubling over the past year and widespread material price hikes squeezing developers. A 1,000 sq. ft. house may now cost buyers at least ₹2 lakh more than before, with smaller builders struggling to keep projects on track.

Prices of key materials M-sand, P-sand, and 20mm aggregates have jumped nearly 21% in recent months. Cement prices surged 10% last week, triggering a 5% rise in ready-mix concrete costs. Many districts are also reporting elevated rates, compounding supply chain disruptions and unsettling contractors.

“This translates to a minimum increase of ₹250 per sq. ft. for new homebuyers,” said P. Kruthivas, a member of CREDAI Chennai. “We’ve urged the government to step in immediately.”

The hardest hit are small and mid-sized developers. “Projects are becoming unviable. If this continues, the sector could come to a halt,” warned G. Mohan, former president of the Chennai Southern Builders Association. Builders are now stockpiling materials to hedge against future hikes, but many lack adequate storage.

Industry groups say steep government levies and rising production costs are driving up prices. “Mining levies — including royalty, green fund, and district mineral foundation charges have sharply increased,” said S. Yuvaraj, president of the Tamil Nadu State Sand Lorry Owners Federation. “Combined with higher operational costs, the price of M-sand, P-sand, and blue metal has nearly doubled year-on-year.”

Land acquisition costs for mining have also risen by 85% since 2023, according to the Tamil Nadu Stone Quarry Crusher and Lorry Owners Association. Despite high production costs, many suppliers were previously selling at lower margins a trend now no longer sustainable.

Meanwhile, a labour shortage triggered by festival season migrations is adding to the industry’s woes. “There’s a serious manpower crunch and rising labour costs, affecting both public and private projects,” said S. Ramprabhu, chairman of the DTCP committee at the Builders Association of India. “Tender quotes are now falling far short of actual expenses.”

With no immediate relief in sight, experts warn that rising input costs may continue to push housing prices higher in the coming months.