Need Of The Hour: Housing At Favourable & Reasonable Price Points

When there is so much demand for housing in India, then why is there a scarcity of supply? If there is demand, should not supply follow? A majority of Indians may wonder why we don't have housing in India at suitable price points, which many of them can actually afford.

In Indian real estate, land plays the central part in every dealing. In specific, urban land is over-regulated and at the same time badly regulated and therefore, we have mounting prices which have no relationship with our income and wealth levels. This is worsened by the fact that there has been large-scale abdication by local governments of their role as providers of basic amenities i.e. sanitation, roads, water lines, water purification plants, sewage lines, sewage treatment plants, electrical lines, electricity transmission towers, storm water drains and many other things. All these are quite ordinary things that are routinely provided by local governments in other countries, which are not essentially richer than us.

Also read: Is Property In India Still Not Affordable Enough?

Strangling regulations, high-priced lands and almost non-existent infrastructure have resulted paradoxically in a situation where regular laws of economics do not work. This directly leads to — supply does not follow the constant demand. There can be many justifications. One can say that the laws of most Indian states encourage and subsidise luxury housing at the cost of more affordable homes. Hence, we witness the absurd talk of homes in urban India being among the costliest in the world and forget that we are among the developing countries in the world. We remain ignorant of the fact that as soon as we step out of gated luxury ghettos, we are faced with the mounts of garbage, potholes, polluted air, dim or no street lighting, gridlocked traffic, water-logged roads and other depressing factors.

What can be done for a proper functioning?

First, we need to emphasise on doing business with complete ease. Secondly, we should start removing (at a very detailed level) one by one the strangling laws and regulations that lead to a delay in construction, which, in turn, result in overpriced lands. Thirdly, we must focus on our urban infrastructure. These are the basic things that the state governments should focus on. For the betterment of demand and supply chain, we should put all the three – ease of doing business, declining land prices and better and smarter infrastructure –the primary focus and be ready to get the result of how the law of economics will come back into play. The supply of housing at reasonable price points will also start commencing and will accelerate too.

Also read: Expecting Property Price To Fall After Demonetisation Move? You May Be Disappointed

It is all up to the state governments, as to how they will compete to create enabling and empowering environments where end users can start accessing decent housing at fairly reasonable prices. If we can excel in other consumer products (which are high in demand and getting adequate support from the supply point of view) like smartphones and gadgets, then there is no reason why we cannot do it in the housing sector.