Just last October, construction costs in India rose by about Rs500 per square foot as a result of the diesel price increase.

This rise in cost didn’t limit itself to the shoulders of developers though. It spilled off onto the shoulders of property buyers as well.

Is the same waiting for Bangladesh, now that fuel prices in the country rose by as much as 51%? So far, the jury is still out on it. But the smart money would be to bet on another round of property price increases in the country.

The taste of the recent property price hike is still lingering in our mouths. Realtors in Dhaka reported about a 10% rise in flat prices during Q1 of 2022 – which came on the heels of the raw material price increase.

Now, before that taste could fade away, the news of a fuel price hike hit the industry without any warning. Both consumers and realtors alike are worried about how much indirect effect this will have on the property market.

Already, the price of steel rods in the country has risen by Tk2,000 to Tk3,000 per ton since the start of August. The 60-grade MS steel was selling for around Tk87,000-87,500 at the beginning of the month.

But now it’s selling for around Tk89,500-92,000 per ton. Albeit, this rise is a consequence of multiple factors such as fuel price rise, inflation, and the decrease in value of the Taka against the Dollar.

These same factors are poised to impact the price of real estate in the coming days as transportation costs and import costs of raw materials keep rising.

The change in fuel pricing is also having an effect during construction as well, as the cost of running generators and machinery is exceeding previous budgets for developers.

While the primary real estate market is preparing to take a hit from the fuel price hike, the secondary market is seeing greater demand than ever before.

According to the Chairman of Apex Property, Mr. Mike Kazi, real estate consumers are leaning more and more towards buying used flats today due to their relative independence from external price-increasing factors. However, this might soon be changing as property prices have been rising since the tail end of 2019.

The unexpected fuel price hike could have some disastrous effects on Bangladesh’s property market as these cost-increasing factors continue to pile on top of each other.

And this rate, buying real estate will exceed people’s affordability soon. The full effect of rising fuel prices is still unseen, but it is not unexpected.