Owning a home is still a distant dream for many

Irrespective of all the change that have been witnessed by the real estate sector in India, owning a house is still loaded with a pool of uncertainties to many people. Not only building or buying a house is difficult, even renting one has become extremely difficult for a majority of population.

After much struggle, even if they show some interest to invest in the sector, the regulatory system, rising costs, non-availability of affordable projects, etc make them to rethink about getting into property dealing.

Major issues in property buying

There are several issues faced by buyers in real estate segment, which include high cost of land, rising input costs, loan availability, labour shortage, delayed completions and others. But of all these issues, the important one is the lack of proper measures to enhance supply in order to meet the existing demand at a given time.

The issue exists only in the residential realty segment. The commercial realty segment is closely linked to the economic cycle and happens as and when needed. House is a basic need of every family irrespective of the economic factors. With policies favoring increased supply at reasonable costs, it is possible to deal with the issue of housing shortage.

Demand-supply gap

Take a look at Mumbai’s housing. Around half the city’s population lives in slums while 10-15 percent in dilapidated structures and chawls, which is evident that only about one-third population of the financial capital of India is living in proper housing units, claim real estate experts.

Unfortunately, very little is being done by the Government to support the sector, even though it has recorded around 15-20 percent growth (almost consistent) annually for the past many years. There is a shortage of around 20 million residential units in India and the demand-supply gap has been expanding annually.

Meanwhile, regardless of the fact that there is a huge shortage of housing, the sector has to grow. A better planning of operations by the authorities is very much required for large-scale reforms.

Prices unaffordable

Mounting property costs is a result of many factors. About a third of the price goes in the name of taxes and duties. Project delays owing to delays in seeking approvals often add to the costs. And in urban areas, where there is huge demand for properties, the price rise is obvious.

Property prices can be controlled only through an increased supply. This further requires unlocking more land for development and promoting vertical growth. The government has to identify the areas where demand is high and enhance the floor area ratio (FAR) for properties in those areas. Also the public sector has to concentrate on improving basic facilities including power, water, sewerage, healthcare, education, roads and transport.

Home loans

Another major concern for buyers is to adjust adequate funds to buy a house. Banks have to provide home loans at a lesser interest rate which is only possible if RBI supports the banks. Non-performing assets (NPAs) in home loans are usually less than two percent of the loans disbursed.

Further, encouraging housing will also drive growth in many other allied industries including cement, steel, electrical and electronic, manufacturing, etc.

According to Credai’s national president, Shekar Reddy, new laws like the Land Acquisition Bill and the Real Estate Regulatory Bill are a major concern as they give way to increase in land rates, bring in new approval and regulatory systems to the existing ones. The most important thing required for the sector is a single window system, to speed up project approval process.