Sunday, April 02, 2006

Business standard on Real estate

A well written piece in BS by TN Ninan.

Two issues should get attention. First, it is natural for house prices to climb when the economy is doing well, incomes are rising and interest rates are low. All those factors encourage investment in housing, so demand increases and there is nothing wrong with that. The issue that should get attention is the supply side: What are we doing to ensure that supply grows with demand, so that prices stay reasonable? The answer is: Precious little.

Real estate is a tricky business, most politicians are either builders themselves or hand in glove with builders. Will they do anything to bring down the prices - not when they are laughing their way to the bank. Lakes are encroached upon, government land is encroached upon, quitely regularized and sold off to unsuspecting buyers.

The second issue is the negative impact of high real estate prices. They lock the majority out of the housing market, and make more distant the dream of owning a home—in a country where the majority in our cities are not home-owners, and the majority of home-owners crowd their families into one- or two-room apartments.

And then again who wants to build cheap houses when there's money in expensive ones.

What makes the picture move from “unfair” to “grotesque” is the fact that exceptionally high real estate prices exist with poor civic infrastructure and services (and this is the third issue).

Absolutely spot on.

A topic touched upon in this blog, here, here and here.

1 comment:

swamyg said...

So true.. I was searching for opinions on real estate and the way it is acting out in Blore ...and your postings have helped consolidate my thoughts