Rise in realty prices, who is responsible?
Indian real estate sector
The Indian real estate sector is contributing almost 6 per cent in country’s GDP and it also has generated the employment for 76 lakh people. This sector has nourishes the industries like; chemicals, tiles, cement, steel, paints, fixtures and fittings. The growth of Indian economy depends on the growth of its cities and it is the product which real estate developers delivers. The contribution of real estate developers are overshadowed by antipathy against the entire realty sector of country.
On the other side it is true that some of the real estate developers intentionally undertake a slower pace of construction because of slow sale of their apartments. Whereas, in most of the cases the reason for delay is government authorities, who don’t grant timely approvals. Obtaining the 57-odd permissions to begin construction is not cup of tea and it could take as long as two years and it is possible that during this time the cost of acquisition, construction or even holding the land for a project, rises.
The other un-favorable condition for developer can be that he had to rework on specifications of their upcoming as well as ongoing unapproved projects and it can led towards the significant project delays. Apart from an exacerbated cash crunch, developers also had to contend with the ire of buyers. If we consider the unexpected price increases or changes in apartment area after consumers have purchased properties from a real estate developer, these often occur because of changes in the project plans were required by the authorities before issuing an approval. Before two years, revisions were made in the DCR regulations for the MMR (Mumbai Metropolitan Region), which simultaneously road blocked several real estate projects and added to the overall development costs by about 15 per cent.
For real estate industry the fact is simple that there are 20 per cent hikes in construction cost and price increases across most projects in MMR. Whereas due to faulty land acquisition and title disputes the few real estate developer are ready to fly with in the night. It is true for the some cases in the Noida Extension, which has been legally established because of acquisition issues have been the fault of the authorities. However as always the blame is on the part of builders and it’s high time for them as they take a balanced view of the problem
House prices are so high because there are too many people and not enough houses.
While this is true, house prices have also been pushed up by the hundreds of billions of pounds of new money that banks created in the years before the financial crisis.