Realty Bites

The real estate is doing very good with the property prices going over the roof. Innumerable infrastructure projects and big ticket efforts like the New Bombay Airport, SEZs, Trans Harbour Sea Link, The Metro, and all such other projects promise to change the face of the city.

Take pride in the fact that soon you will be in a city with global aspirations that will boast of infrastructure par excellence and a very international experience.

I now enjoy higher incomes, better lifestyles and all the other things the middle class now considers a routine and mundane part of their life.

I am happy. But can I rejoice? NO.

Around ten years ago, I could have afforded a house in Bombay City.
Now no longer.
Around two years ago, I could have afforded a house in New Bombay.
Now no longer.
I am progressively being edged out of the city that I call my home.

New Bombay was conceptualized as a means of providing affordable mass housing to people. Somewehre down the lane, that objective seems to have been (conveniently) forgotten. CIDCO, is now on a money making spree and is amongst the main entities responsible for the property prices sky rocketing there.

Every square inch of land is being auctioned off. If CIDCO has 500 plots to sell, it creates some sort of an artificial scarcity by only releasing say 5 plots at a time. We have innumerable builders who fight amongst themselves to grab the prized plots. The direct result of this bidding is that the plot under question gets grossly overvalued at the bidding stage itself. CIDCO is now doing to New Bombay realty exactly the opposite of what it was meant to do.

And now the builders pitch in to earn their profit over and above the over valued realty rates. The buyer is made to pay for ‘super built up area’ - area that is not even owned by her (mind you, this is everywhere now). [Since my emphasis in this post is about affordability of housing, I had better not deviate – the builder angle of the realty industry needs due attention – maybe in the next post!]

Is the government doing anything at all to control the situation?

The Housing Policy of the GoM drafted last year is yet to take shape. It does heavily emphasize on integrated townships to provide affordable housing to mainly the Economically Weaker Sections (EWS) and the Lower Income Group (LIG). Building affordable housing is to be incentivised by providing the developers with additional FSI and other incentives.

The in the pipeline ‘Aam Aadmi Awas’ of the GoI envisages to provide 45 million housing units to the LIG/EWS - all at just a lakh each. 270 sq feet dwellings with in house sanitation facilities and other recreational facilities to complement the settlements will surely provide at least a reasonably better standard of living. Interest subsidies are planned to try and take care of the funding aspect as well. Which means the LIG does have some concrete proposals to look up in anticipation to.

Now what about a normal middle class or a MIG (Middle Income Group) family which is too rich to fall into the LIG and too poor to fall in the UIG (Upper Income Group) to be able to afford a house in Bombay (well I specify Bombay because I reside here – the sorry state of affairs hold true for all major Indian cities)? It is the middle class which is the worst hit and is being marginalised with every passing day. The LIG, being the vote bank, (and honestly deserving the governments due attention too, at least in this case) is always considered by the Government in its policy making. The UIG does not need any pampering anyways.

Gets stuck, the middle class.
Do they need affordable housing? Yes.
Do they have affordable options? No.
Are they affluent enough in the government’s eyes? Yes.
Are they affluent enough to get themselves a place to call home? No.

I feel it is high time that the state played its role in making life a little easier for the MIG. The MIG wouldn’t need much – coz they are halfway there already. Instead of having a rigid cut off for interest subsidies, the government can have some sort of an inverse proportionality between the net income of the family and the interest subsidy they are eligible for. They can incentivise banks that hand out step up loans and thus help the MIG in buying better houses. Softening prepayment laws just in case they are able to cough up the finances required to pay off their dues to the bank, so that net outflow is restricted.

A few thoughts that require the governments’ action for me to find my dream home. Till then, it might just remain as my dream of a home…