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Why Mumbai Home Prices Continue to be Unaffordable for Middle Class 

Residential property prices across the country are under pressure because of a sharp slowdown in demand for new homes. Prices in many parts of the country have seen correction as inventories have gone up, but Mumbai continues to remain one of the most expensive markets in India.

Real estate prices in India's commercial capital is never out of news, says Anuj Puri, chairman & country head of JLL India.

"From the sale of spectacularly expensive trophy properties in South Mumbai to the ever-widening affordability gap for middle class home seekers, the city's residential real estate market is under a constant jaundiced limelight," he added.

JLL listed seven reasons behind Mumbai's high property prices:

1) Geography: Mumbai is surrounded by water on three sides, preventing circular development in the city. Development in Mumbai has always been linear (or one-directional) from the south towards the northern suburbs.

2) Government policies: Over 2013-2015, the Maharashtra government has been increasing ready reckoner rates by 15-20 per cent across Mumbai, a significant jump for the city where prices are already high.

3) Limited supply of land: A significant chunk of land in Mumbai is currently locked in slums and dilapidated buildings, restricting supply of new areas for development.

4) Infrastructure: Major projects such as the Mumbai trans-harbour link, coastal road network, the Navi Mumbai international airport, etc. have made very slow progress, forcing end-users to live in established localities.

5) Investor demand: Non-Resident Indians and people of Indian origin comprise a significant chunk of residential real estate buyers in Mumbai, driving up prices. Often, half the inventory in new projects is sold to such investors even before local brokers get wind of the launch.

6) Migration: Per-capita income in Mumbai is nearly double of the national average, attracting a lot of migrants from other parts of the country. The constant need-based migration to Mumbai encourages landlords to hold onto high prices.

7) Increasing nuclear families: Mumbai's current inhabitants require additional homes because nuclear families are on the rise. The preferred route is to sell an apartment in a prime area and purchase two apartments in a relatively sub-prime area. So, inherent demand from Mumbai's local inhabitants is always rising, which reflects on property prices.

"The fundamentals that drive demand for homes in the city are the reason for Mumbai developers' apparent ability to defy gravity and keep residential prices so high. The fact is that sales are happening for all the above reasons - and they will continue to happen," the property consultant said.


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Realty Trends

Home prices near most-affordable levels in over 30 years: HDFC


Home prices may have been on an upward spiral for many years, but the cost of owning a house in India remains near the most affordable level in over three decades, shows data compiled by mortgage giant HDFC Ltd.

The average price of a home, purchased with a housing loan, rose to over Rs. 45 lakh in the 2012-13 fiscal year -- marking the fourth consecutive year of uptrend from about Rs. 25 lakh in the year 2008-09, HDFC has said in a presentation.

However, factors like an even greater surge in the personal income levels, tax incentives and lower interest rates, have resulted into houses becoming more affordable to purchase, it said.

 

 

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India Property Investment Gyan

Major schemes for affordable housing to be modified: Girija Vyas


NEW DELHI: Major schemes meant for providing affordable housing to urban poor will soon be modified to make them more people-friendly, the government said today and invited the private sector to contribute more actively in this area. 

Speaking to reporters here, Housing and Urban Poverty Alleviation (HUPA) ministerGirija Vyas today said her ministry is modifying all the major schemes including the Rajiv Awas Yojana (RAY), Rajiv Rinn Yojana and the, Affordable Housing in Partnership scheme and added enormous budgetary support has been earmarked during the current plan period. 

Secretary HUPA Arun Kumar Misra told reporters that a fund of Rs 35,000 crore had been allocated to the ministry for the implementation of three major schemes, including RAY, which was being run in as a pilot project earlier under 12th five- year plan. 

He said the ministry would require approval from the cabinet for the implementation of these schemes and efforts would be made that through these funds 2 million affordable houses are encouraged. 

He said that in addition to the central government funds, banks and credit institutions would be providing funds for construction of affordable houses. 

Vyas said that with urbanisation, the number of urban homeless and area under slums had grown. 

Vyas said there was a need for private developers to develop economic models to foster affordable housing for economically weaker sections and lower income group households in urban areas as government efforts in this direction needed to be supplemented. 

Vyas also said a technical group, set up by her ministry, had shown that out of 18.78 million housing shortage in the country, 96 percent shortage is in EWS and LIG category and for this huge investments and private sector participation were required. 

Misra said the group set up by the ministry has suggested incentives for the affordable housing sector included concessions to development-related charges and service taxexemptions. 

It also sought direct tax rebates for affordable housing projects and inclusion of the sector in the 'infrastructure facility' he said and added the task force had felt that governments need to still provide direct capital grant support to affordable housing projects. 

Misra said that in the symposium held today where states, experts and private sector representatives were present, there was unanimity on many of the suggestions.

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Green Property- Eco Homes

Reclaim your city space: Projects in Delhi, Mumbai and Kolkata aim to transform lives

 
Three projects in three cities aim to transform the lives of people who live close by. The one in Mumbai hopes to transform a congested area into a green precinct; the one in Delhi converted an open drain into a walkway, while Kolkata hopes to bring the crowds back...