Wednesday, January 09, 2008

Cheap housing

I was reading this post at The Examined life, and it struck me that this is what is happening in Bangalore. It looks like, real estate prices are being driven by a small segment of people in the second last para of the post. (Make no mistake, small and not small are relative terms, as are cheap and expensive.)

Cheap houses in Bangalore today means, 25 lakh upwards. Expensive houses means in the range of about 80 odd lakhs and then upwards. And I agree with Ravi when he says that a solution is in the offing. (The solution is only partial, surely in Bangalore, we need more and better roads.)

As of now only Bombay has a real option. Have money? Stay closer to your place of work. Less money? Go further away and use the public transport to reach your place of work.

So, in a place like Bangalore there is nothing that you can get for anything like 25 lakhs today and given the rather pathetic state of public transport, the only option you have is to buy a bike and drive all through the traffic. Anything lower than that, you can forget it and think about staying on rent (and paying an arm and a leg).

A related article, here in Mint. Here Niranjan rightly argues for creation of new cities, but I think that even here cheap housing will be difficult - given current conditions. Case in point being Bidadi - where there is a potential city being created. Land prices are already nearing the prices in Bangalore, so if you think Bidadi or Jigani will be a middle class heaven, it is tough. Navi Mumbai did have this effect on Mumbai at one point, as did Thane, Dombivli and the other suburbs, but it is tough to see that happen today. Mahamumbai is another case in point where prices are already driven up in anticipation.

Here is what happens in a "new city". Builders offer huge living spaces with the result that the budget still remains half a crore, except that you get a much bigger space there. Nobody, really nobody wants to sell small houses for the middle class. How do you get around that?


Anonymous said...

Maybe, just maybe, the way forward from the small car is the small house. With private living spaces, small and functional and modular kitchens and furniture that hides or changes shapes? The living area might be a small 300-500 sq ft. That might make it affordable?

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Sujit said...

well one way this question has a reference to the very obvious class called the 'Middle Class'. And this class is considered as the doormat class by the upper class. As you said the concept of 'cheap' and 'expensive' is a relative term, the relativity here is defined by the very upper class and they dont want 'cheap' houses by their standards.

The fact of going around the problem can be obtained only by having some one who really thinks for the middle class, which is unfortunately no-one.

I am residing in chennai from past five years and watching the property prices getting tripled, quadrupled in these years. Very true as you mentioned, they start off stating 'Satellite Township' development. Then all big builders will post ad's for 'Super Luxury Apartments' in those townships with price tag of 60-70 lakh onwards.

That's what happened with a prime sub-urban development zone here which is called the IT Corridor of chennai. All major IT companies has offices on this part. Earlier you could spot these offices just beside the paddy fields or the coconut grooves. But as soon as government declared one part of the area as SEZ and started conversion of the road to a 6 lane highway, it has become the hotspot of all major contsruction companies vying for land.

Forget about buying cheap houses, even rentals has gone up by 4-5 times. As its the place only for the upper classes, and the very 'middle class' will still come to the offices by public transport on that 6 lane highway.

I think it's more of a mindset of the builders. They have a preconceived notion that middle class housing projects won't return them handsome profit. Or they lack the innovative approach to make profit by building houses for the middle class. Or may be they think who has the time to be innovative for middle class when they can make quick money for making luxury apartments for the upper class.

It's the mindset which needs a change.

james said...

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