House that?
Times of India's Edit Page team comprises senior journalists with wide-ranging interests who debate and opine on the news and issues of the day.
Home prices are rising steeply, even as unsold homes pile up. A strange & worrying disconnect
Average life expectancy in India was 71 years before the pandemic. Long enough to be a grandparent, but not a homeowner in Mumbai, as TOI reported earlier this week. Even the top 5% – financial outliers – would need 109 years' savings to fund a 1,184sq-ft, 2-bedroom purchase in the financial capital. A Delhi home seems hardly 'affordable' with a commitment of 35 years' savings. Point is, few can buy a house in India today.
Yet, houses are being built at ever higher price points. In the Mumbai region, builders announced projects with over 1L houses last fiscal, although more than 5L remain unsold. In Pune, 2.4L houses are unsold, 1.1L in Hyderabad, 68,500 in Delhi-NCR. Housing must be the only industry where sellers aren't bothered by inventory. It's also the only one immune to the laws of demand and supply. Consider how prices in Hyderabad have jumped 43% in five years despite 177% growth in unsold inventory. Peculiarities of the Indian housing market don't end there. Houses are expensive not just by Indian salary standards but globally. NYT reported in Feb that the median price of a 4-bedroom Manhattan apartment is $3.7mn or ₹32cr. Plenty of Worli apartments are now in that ballpark.
Housing is a primary need, so govt must figure out what is pushing prices beyond buyers' reach. Families stake their future to buy a house somehow, and their steep monthly commitments squeeze demand for other things – cars, refrigerators, TVs, etc. That 1,184sq-ft Mumbai apartment costs ₹3.5cr, on average. A 15-year loan of this size means an EMI of ₹3.6L. But an equivalent loan in US costs only ₹2.8L per month. Costly homes, costlier loans – govt has its task cut out.
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This piece appeared as an editorial opinion in the print edition of The Times of India.
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