Building Material Demand May Recover in FY27 as Government Capex Rises 19%
New Delhi, August 17, 2026: Monsoon rains have slowed construction activity across India, affecting cement procurement and building-material demand. However, a sharp rise in government capital expenditure could provide a stronger push to construction activity in FY27.
Government capital expenditure by the Centre, states and central public sector enterprises increased 19% year-on-year during April-May 2026, according to an Equirus Capital report.
Monsoon Slows Construction Activity
Widespread rainfall in July affected construction activity, dealer offtake and cement procurement. Cement buying remained largely need-based, while prices were flat to slightly lower across several markets.
For people planning to build or renovate their homes, softer material prices in the near term could help keep construction budgets under control.
Government Capex Could Boost Building Material Demand
The increase in government capital spending is a positive signal for the construction sector. Higher spending on infrastructure projects can generate demand for cement, steel and other building materials.
As monsoon-related disruptions ease, stronger execution of infrastructure projects could help revive demand across the sector.
Cement Prices Remain Mixed
Cement demand remained uneven across the country. Western and southern markets recorded relatively healthier demand, while some other regions continued to see weaker traction.
Cement prices declined by around ₹5 per bag in western and central markets, while Hyderabad saw an increase of about ₹8 per bag.
For homebuyers and property owners, such movements matter because construction-material costs can directly affect the overall cost of building a property.
Why This Matters for Homebuyers
Building-material prices eventually influence construction costs and, in some cases, the pricing of new housing projects.
If demand strengthens significantly in FY27, higher cement and other input costs could put upward pressure on project expenses. At the same time, increased infrastructure spending could improve connectivity and development around emerging residential locations.
Infrastructure Activity Gives a Positive Signal
India's core infrastructure index grew 5% year-on-year in June, supported by higher output from cement, electricity and iron ore.
Fresh infrastructure orders also remained positive despite the seasonal slowdown, indicating that the broader construction pipeline continues to support future demand.
What Happens Next
Equirus Capital expects building-material demand to improve as monsoon-related disruptions ease and infrastructure activity strengthens.
For homebuyers, property owners and investors, the key trend to watch will be whether higher government spending translates into stronger construction activity. A sustained recovery could eventually influence construction costs, housing prices and demand in infrastructure-led property markets.