Owning A Home Is Getting More Expensive

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Owning a house is India is getting more expensive by each day. It now seems that you have to shell out few lakhs extra for every six months delay in buying your home. In spite of sluggish economy over the last 6 years, high interest rate, over supply and many upcoming projects across the cities, the property prices have only gone up. Even though on paper and theoretically you will always read that the prices are stagnant or in some places there have also been price corrections. However, all that is hoax and in reality, when you go property hunting you realize that the prices have only risen. It seems that the property prices across India are immune to external market conditions, government policies and bearish market sentiments. Here are some of the prominent reasons as to why owning a home is getting more expensive –

Owning A Home

Rising Inflation and high disposable income

The retail inflation in India has been in double digits in the last few years. The highly inflation has meant high salaries and this has led to more disposable income. Due to this people have taken risky bets on real estate and this has meant that the demand for properties – both commercial as well as residential continued even when the other sectors were battling for survival. Though the inflation has now subsided, the economy has substantially improved which means that the home prices will continue to rise.

Heavy Investments in real estate by investors

The real estate is one of the safest investments which give stable returns over a period of time. Due to this the investors across the segment including industrialists, sports person, film fraternity, high net individuals, etc. have invested heavily in properties. This has meant that the prices for end users continue to remain high. Additionally, the nonresident Indians have also been actively investing in real estate sector to take advantage of the currency depreciation and high returns. Though the investments by NRIs give the country the much needed foreign currency to bridge the current account deficit but it has meant that the common man’s dream of owning a home continues to remain a dream.

The ordeal of the common man is confirmed by the fact that the end user occupancy in residential segment in United States of America is more than 60% as compared to very low double digit occupancy in India. Hence the demand for home in India by end users is extremely high and comes only second to China. All of these factors have contributed to high home prices even though there has been huge supply in terms of new projects in Jaipur, Hyderabad, Bengaluru, Noida, Ghaziabad, Thane, etc. and almost every city.

RBI’s new definition of affordable housing

Few months back the Reserve Bank of India has said that the home loans of up to 50 lakhs for house valuing 65 lakhs can be defined as affordable housing. The RBI has also said that it will continue to review the definition of affordable housing from time to time. This definition of affordable housing by the Central Bank has come as a big boost for developers and has given them enough reasons to further increase the home prices.

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James is a financial expert who has contributed several business and finance related articles. His expertise and first-hand knowledge of economics makes his blogs and articles informative and helpful for those looking out for guidance and assistance in matters related to finance. He has an active schedule of TV and radio interviews He is co-host of the popular VT Radio show Jim and Gordie Show. latest-articles-buttonJim comes from an old military family dating back to the American Revolution. Dozens of Confederate ancestors fought for the South in the War Between the States. Uncles fought in WWII and Korea. His father was a WWII P-40 and later P-51 Mustang fighter pilot. Vietnam found several uncles serving, a cousin, and brother Wendell as a young Ranger officer. His mother was a WWII widow at 16, her first husband killed with all 580 aboard when the SS Paul Hamilton, an ammunition ship with 7000 tons of explosives aboard, was torpedoed off the coast of Algiers. He has been writing, speaking and doing public relations, television, consulting and now multimedia work for a variety of American heritage, historical, military, veterans and Intel platforms. Jim’s only film appearance was in the PBS Looking for Lincoln documentary with Prof. Henry Lewis Gates, and he has guest lectured at the Army Command and General Staff School at Fort Gordon. Currently he is working to take his extensive historical video archives on line to assist his affiliated organizations with their website multimedia efforts, such as the Military Order of World Wars, Atlanta, Sons of the American Revolution, Sons of Confederate Veterans , Assoc. for Intelligence Officers, the Navy League, Georgia Heritage Council, National Memorial Assoc.of Georgia.

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