CommonFloor Survey: Keep Property Prices under Check
“If I were the Finance Minister, I would create policies to keep property prices under check,” says an Indian aam aadmi.
Union Budget 2015-16 is just round the corner. From realty stalwarts to common man, all eyes are now set on the upcoming budget. And why won’t be? After all, budget announcements have the ability to mould our investment decisions to a significant extent. In fact, consumer platform of CommonFloor– ‘Forum’, has witnessed a plethora of queries pouring in related to budget expectations. This clearly indicates that prospective home buyers are eagerly waiting for the budget to be presented.
Thus, to capture the consumer sentiments, commonfloor conducted a Budget Expectation Survey. We asked our consumers, ‘if you were the Finance Minister, which one step would you take to create an immediate positive impact on the real estate sector?’
Interestingly, about 38 per cent respondents said that they would like to create policies to keep property prices under check. Property values today have reached a sky-high. For denizens, ‘apne ghar ka sapna’ (dream of owning a house) seems to be a distant reality.
Reasons for Increasing Property Values
1) Increasing Cost of Construction Material
Commenting on increasing property values, Anil Pharande, CMD of Pharande Spaces says, “While inflation may have come down, the cost of construction has not followed suit and many developers with less capitalization have been forced to slow down or halt their projects because of this. The costs of raw materials such as cement and steel need to be brought down or an upper ceiling imposed on their prices.”
Adding to this, Nagaraj Reddy, CMD Zonasha Projects and President CREDAI Karnataka says, “Excise duty toward ready-mix concrete and steel fabrication should be abolished. Inflation has come down in recent time but the cost of construction has not and this has had an adverse effect on the industry.”
2) High Lending Rates for Developers
“Lending rates for real estate development currently range between 12-14%, and raising funds through other sources is even more expensive. The interest rates on lending to real estate developers should be brought down so as to help rationalize the cost of construction. This would also help in bringing down property prices,” explains Arvind Jain, Managing Director of Pride Group.
Is there a Solution?
1) Following China and Hong Kong’s Footsteps?
In an attempt to keep residential property prices under control, several measures have been announced by the Chinese government. The below picture describes few of the measures.
2) As told by the industry experts, regularising the construction material costs and reducing lending rates for developers also evolve as a viable solution.
