Latest news with #AffordabilityIndex
Scoop
07-08-2025
- Automotive
- Scoop
Proposed Electronic Road User Charges System 'Likely To Become An Expensive Lemon"
The government's proposal to switch all vehicles to road user charges is likely to become an expensive lemon, says the car review website Motoring expert Clive Matthew-Wilson says: 'Let's be clear: this scheme isn't really about collecting road tolls; this scheme is all about privatising the most profitable parts of our roading system.' As Fleur Fitzsimons of the NZ Public Service Association put it: ' The only people who will see any benefit from this scheme are the corporates who take their cut '. Matthew-Wilson adds: 'Whether the corporation controls the entire road or just the revenue collection, the outcome is much the same.' Experience from Australia and elsewhere suggests this toll road model often creates as many problems as it solves. A 2024 report to the New South Wales government stated bluntly: 'Sydney's toll road network is a poorly-functioning patchwork of numerous different price structures that will cost motorists $195 billion … in tolls over the next three and a half decades on top of the billions they have already paid.' Matthew-Wilson says there is no urgent need for the proposed switch to road user charges for all vehicles. 'For the foreseeable future, we're going to have gas stations and petrol-powered cars. Taxing fuel at gas stations is an incredibly efficient way of collecting taxes. The Customs department collects direct payments from the fuel companies. This system is extremely difficult to cheat, because there are clear records every time a vehicle fills up at a gas station.' The current system brings in around $2billion a year, with very low collection costs. 'By comparison, road user charges require that every vehicle has some reliable way of recording the distance it travels. This is not nearly as easy as it sounds.' 'It's easy enough to toll vehicles driving down a section of highway or vehicles entering and leaving a city. But to keep track of millions of vehicles over thousands of roads over millions of kilometres, is a major logistical task that is likely to cost a large percentage of the revenue it collects.' 'Corporations want a quick return and high profits. This is the very opposite of the public interest. The experience in Australia is that privatised toll roads are really costly to use, but don't increase efficiency.' As Dr Scott Elaurant, chair of the Engineers Australia Transport Society put it: ' In reality, we've created private monopolies over essential infrastructure. These companies are motivated to maximise revenue, not deliver public value. With rising toll prices and persistent urban congestion, the inefficiency of this model becomes evident.' Dr Elaurant adds: 'According to the Australian Automobile Association's Affordability Index (June 2023), the average toll-paying household in capital cities spent $66.19 weekly on tolls, while the national average was just $13.24. [These road] users are [not paying based on the quality of the roads], but on where they live or work….public roads [are meant to be] accessible to all [but this basic right is eroded] when tolls become unavoidable...' Matthew-Wilson adds that the people planning the government's toll system appear to assume that all vehicles are easily traceable. 'According to various credible estimates, approximately 9% of cars lack registration, while an estimated 400,000 cars are driving around without a current WoF. My guess is that these figures are conservative.' '[1]You can prosecute these 400,000 drivers, but many of these drivers can't afford to pay the fines they already have. It's common for poor people's vehicles to be seized by bailiffs over unpaid fines for WoF and registration. After one car goes, the same poor families scratch together enough money to buy another car and the process repeats. Remember, you're talking about hundreds of thousands of vehicles here. There's no prison large enough to hold even the worst offenders.' Matthew-Wilson adds that, even if you solve the problem of illegal vehicles, the infrastructure required to collect revenue is likely to be very expensive, with poor returns on investment. 'The transport minister, Chris Bishop, is talking nonsense when he implies that road user charges can be collected solely using a transponder in your car that triggers a charge when you drive down a main road. [2] These sort of transponders, such as the ones used for Sydney's motorway toll collections, have an extremely short range. Such a system would be useless over an entire country." 'Smartphones are equally useless for recording vehicle usage, because about 40% of the country doesn't have cellphone cover. And people lose smartphones. And they break and go flat and get stolen.'[3] Matthew-Wilson believes the only feasible system for recording road user charges over the entire country would require some kind of satellite monitoring system, permanently connected to each vehicle. 'This system would also require very sophisticated systems to gather and sort the data from the millions of vehicles moving around our roads every day.' 'Such a data collection system is also wide open to abuse, regardless of what the politicians tell us". 'Once you have 24/7 electronic surveillance of the national vehicle fleet, it's also inevitable that this technology will be given additional uses. For example, many cars are already fitted with devices that can shut them down without warning. ' There are solid law-enforcement reasons for fitting every car with shut-down technology. But there are frightening implications in such a move. For example, the government could decide it didn't want protestors in a particular time and place. Using remote technology, the government could simply track the protesters then shut down their cars at the side of the road.' 'Governments almost never give up their power but they often find new ways of staying in control. That's a simple reality.' Matthew-Wilson adds that charging vehicles for the distance they travel rather then the fuel they use, could easily mean a huge rise in costs for vehicles such as taxis. 'Most taxis in New Zealand are Toyota petrol hybrids. While the government taxes petrol at the gas station, these petrol hybrids get rewarded for their efficiency. If the government switches to taxing the distance these hybrids travel, these vehicles will be penalised, along with the passengers who ride in them. But, under the government's proposed system, rich people in gas-guzzlers could be rewarded, because they tend to travel shorter distances. Therefore they will pay less. So the owners of taxis will be charged unfairly while the owners of gas-guzzlers will get an easy ride.' [1] In most rural areas there's little or no public transport; having a vehicle is not a luxury but a necessity. Most drivers would rather drive legally, but driving legally requires that you can afford to pay the cost of obtaining a WoF and then the cost of registration. New Zealand's vehicle registration system won't let you register a car if it doesn't have a WoF and it won't let you get a WoF if you don't have a registration. This makes it very easily for a car to simply drop out of the system. It's also getting harder and harder to pass the WoF test, so many poor families simply choose to drive illegally. [2] Transponder-based systems typically use a a tiny transmitter about the size of a deck of cards. This device is placed on the inside of the car. Antennas, or electronic readers, are positioned above each toll lane. These antennas send out radio frequencies that communicate with the transponder. When a vehicle passes, the vehicle's details are therefore recorded and passed to a central computer. However, this kind of system requires a permanent antenna at every major intersection. When there's no antenna to communicate with the transponder, the vehicle becomes invisible to the system once it exceeds the range of the antenna. This makes this system impracticable for use on a nationwide basis. [3] While mobile networks cover 99% of the population, they only cover about 60% of the country's landmass. For example, there's little or no cellphone reception is a 200-kilometre stretch between Fox Glacier and Makaroa through the Haast Pass on the West Coast.
Indian Express
05-07-2025
- Business
- Indian Express
Why slowing, uneven growth in housing sector indicates subdued demand
India's housing sector may be booming on the surface, but it's increasingly becoming a market for the few. Even as home sales hit a 12-year high of 3.5 lakh units in 2024, much of the growth came from the premium segment, and was indicative of a deep divide in the sector: while developers target affluent buyers, homeownership is increasingly out of reach for a large section of the population. But even as sales in India's top-seven cities fell 24 per cent year-on-year in the first half of 2025 and new launches dropped 13 per cent, developers continued with their premium push, according to real estate services firm Anarock. In April-June, the share of new launches priced above Rs 1.5 crore increased to 46 per cent from 43 per cent in the previous quarter, while the share of affordable homes — those priced below Rs 40 lakh — remained steady at 12 per cent. While affordable metrics have improved in 2025 owing to the 100 basis points (bps) of repo rate cuts by the RBI since February, the gain has been offset by rising property prices, especially in cities like Kolkata, Chennai, and Ahmedabad. K-shaped growth The tilt in housing supply toward the upper end is evident in the segment-wise composition of new launches. As per Anarock, in April-June, the mid (Rs 40 lakh-80 lakh) and premium segments (Rs 80 lakh-1.5 crore) together made up 42 per cent of new supply, down from 45 per cent in January-March, as the share of homes priced above Rs 1.5 crore rose, indicating a bias toward higher-value projects. This is not to say that there are no buyers for affordable homes. According to real estate consultancy Knight Frank India, homes priced below Rs 1 crore accounted for 54 per cent of total sales in January-March, with almost a quarter of total sales coming from homes priced below Rs 50 lakh. However, this was down from 60 per cent in Q1 of 2024. As a result of the shift in supply, 52 per cent of housing inventory at the end of March were either high-end (Rs 80 lakh to Rs 1.5 crore) or luxury and ultra luxury (above Rs 1.5 crore), while homes prices below Rs 40 lakh made up just a fifth of total stock, according to Anarock. It is no surprise then that the mood among buyers is not upbeat, with property selling platform Magicbricks' Housing Sentiment Index (HSI) falling to 138 in April from 155 in September 2024. 'The Rs 3.5 crore-5 crore and Rs 2.5 crore-3.5 crore segments recorded the highest HSI, driven by buyers with Rs 1 cr+ annual income,' Magicbricks said. Affordability question Except Delhi NCR, buying a home has seemingly become easier so far in 2025 in seven of the eight major cities in the country, as per the Knight Frank's Affordability Index. For instance, the index for Mumbai improved to 48 per cent in the first half of 2025 from 67 per cent in 2019 and 50 per cent in 2024, implying that a homeowner now needs to spend 48 per cent of their income to finance the Equated Monthly Instalment. But even at 48 per cent, the affordability index for Mumbai is only a shade under Knight Frank's threshold of 50 per cent it considers as unaffordable. Other cities such as Kolkata and Chennai saw a marginal 1-percentage-point improvement in affordability to 23 per cent and 24 per cent, respectively, while the index for Ahmedabad improved to 18 per cent from 20 per cent. However, prices are rising faster in these smaller centres. Data from the RBI's All-India House Price Index shows that housing prices increased 3.1 per cent year-on-year in January-March at the national level. Cities such as Kolkata, Chennai, and Ahmedabad, however, saw prices rise at a faster clip of 8.8 per cent, 7.2 per cent, and 3.8 per cent, respectively. Weakening demand The situation has become sufficiently worrisome for policymakers to address it, with home loan growth, often a bellwether of the economy, having slowed down. Excluding the impact of the merger of HDFC Bank with Housing Development Finance Corporation, latest RBI data shows home loans rose 13.8 per cent year-on-year as of May 30, slower than the 19.9 per cent growth recorded a year earlier. Loans to housing finance companies, meanwhile, were down 6.8 per cent over the same period, compared to a 3.8 per cent growth recorded at the end of May 2024. 'Urban demand and demand for housing, vehicles, and other goods that are sensitive to interest rates are not at a level we would like them to be. Due to this, private capex is not showing robust signs of revival,' Ram Singh, one of the external members on the RBI's Monetary Policy Committee, told The Indian Express on June 25. (The writer is an intern with The Indian Express)
India Today
25-06-2025
- Business
- India Today
Planning to buy a house? This is India's most affordable city in 2025
There's something deeply personal about buying a home. It's not just about bricks and beams. It's where memories ae made and dreams quietly unfold with each passing year. But for many families, that dream often feels just out of if you are planning to buy a home in India this year, Ahmedabad may be your best option. According to Knight Frank India's latest Affordability Index, the city is the most affordable in the country in index, which tracks housing affordability across major Indian cities, shows that buyers in Ahmedabad spend only 18% of their average income on home loan EMIs. This is well below the 40% affordability limit, making Ahmedabad the most budget-friendly city for comes next, with an affordability ratio of 22%, followed by Kolkata at 23%. These cities continue to offer better value to buyers when compared to other metros. The Affordability Index considers various factors such as property prices, average household income, and home loan rates to calculate what share of a household's income goes towards monthly INTEREST RATES HELP BUYERSThe report highlights that the Reserve Bank of India's decision to cut the repo rate by 100 basis points since February 2025 has played a key role in improving housing affordability across the country. Lower interest rates have reduced EMIs for home loans, making it easier for people to buy fact, the first half of 2025 has seen a steady improvement in affordability in most cities. One of the most notable changes was seen in Mumbai. Known for its high property prices, Mumbai has always been the least affordable housing market in India. But for the first time since the index was introduced, Mumbai's affordability ratio dropped below the 50% mark, to 48%. While this is still higher than other cities, it marks the city's most affordable period in recent SEES A SMALL DROP IN AFFORDABILITYIn contrast, the National Capital Region (NCR) saw a slight decline in affordability. The index shows that buyers now spend 28% of their income on housing, up from earlier figures. This is mainly due to rising residential prices, which have partly offset the benefit of lower interest to Shishir Baijal, Chairman and Managing Director of Knight Frank India, 'Affordability plays a critical role in maintaining homebuyer demand and sustaining sales momentum.' He explained that growing incomes and stable economic conditions help people feel more confident about making long-term financial commitments like buying a also pointed out that the RBI's estimated GDP growth of 6.5% for FY 2026, along with a supportive interest rate environment, is likely to keep affordability at healthy levels through the rest of CONDITIONS SUPPORT BUYINGThe RBI's recent measures, including a neutral stance on policy rates and a cut in the Cash Reserve Ratio (CRR), have helped improve liquidity in the banking system. This has made it easier for banks to lend, reducing borrowing costs for both homebuyers and with this, the overall economic environment is improving. Inflation has stayed under control, salaries are growing steadily, and the economy is on track. These factors have led to better affordability, encouraging more people to consider home report also notes that current affordability levels are some of the best seen since the post-pandemic period. This, along with lower interest rates and stable income growth, is helping drive a steady recovery in the housing anyone planning to buy a home in 2025, cities like Ahmedabad, Pune and Kolkata offer the most attractive conditions right now.- Ends advertisement
Hans India
25-06-2025
- Business
- Hans India
Home purchases are more affordable now
Mumbai: The house purchase affordability of homebuyers has improved in the first half of 2025 as the RBI slashed the repo rate by 100 basis points during this period, according to real estate advisory firm Knight Frank India. According to the Knight Frank Affordability Index, Ahmedabad is the most affordable housing market among the top eight cities, with a ratio of 18 per cent, followed by Pune at 22 per cent and Kolkata at 23 per was the least affordable city with a ratio of 48 per cent. However, the city's affordability index level improved by over 2 percentage points, moving from 50 per cent in 2024 to 48 per cent in H1 2025.' This is the first time in the history of the index that Mumbai has come below the threshold of the 50 per cent mark, which is considered the outer point of affordability. Mumbai's market, which has always been above the threshold, has now become more affordable due to the reduced home loan rates,' the report said. Affordability levels have marginally worsened in the National Capital Region during the same period, with households now needing to pay 28 per cent of their income for acquiring an average property in the city instead of 27 per cent in 2023. This can be attributed to the steep increase in residential prices, which have eclipsed the impact of the interest rate cuts in the NCR, according to the report. Knight Frank India's Affordability Index is based on the EMI (Equated Monthly Instalment) to income ratio for an average Baijal, CMD, Knight Frank India, said, 'As incomes grow and the economy gains strength, financial confidence among end-users improves, motivating them to commit to long-term investments such as home ownership. Given the RBI's healthy 6.5 per cent GDP growth estimate for FY 2026 and a favourable interest rate scenario, affordability levels are expected to be supportive of homebuyer demand in 2025.'
United News of India
25-06-2025
- Business
- United News of India
Interest rate cuts boost House purchase affordability of homebuyers in H1 2025: Knight Frank India
Hyderabad, June 24 (UNI) House purchase affordability of homebuyers has improved in H1 2025 as the RBI slashed the repo rate by 100 bps during the period, according to Knight Frank India, in its proprietary report, Affordability Index. According to the Affordability Index, Ahmedabad is the most affordable housing market among the top eight cities, with a ratio of 18 percent, followed by Pune at 22 percent and Kolkata at 23 percent while Mumbai was the least affordable city with an affordability level of 48 percent. However, it is noteworthy that the market has breached the 50 percent mark for the first time in the history of the index. Knight Frank India's Affordability Index, which tracks the EMI (Equated Monthly Instalment) to income ratio for an average household, witnessed steady improvement from 2010 to 2021 across the eight leading cities of India especially during the pandemic when the Reserve Bank of India (RBI) cut policy repo rate (REPO) to decadal lows. The central bank subsequently raised the REPO rate by 250 bps in a space of nine months starting May 2022 to address high inflation which caused stress on affordability levels. However, with inflation worries subsiding and economic growth regaining focus, the RBI slashed the REPO rate by 100 bps since February 2025. Shishir Baijal, Chairman and Managing Director, Knight Frank India said: "Affordability plays a critical role in maintaining homebuyer demand and sustaining sales momentum, both of which are vital contributors to the broader economy. As incomes grow and the economy gains strength, financial confidence among end-users improves, motivating them to commit to long-term investments such as home ownership. Given the RBI's healthy 6.5 percent GDP growth estimate for FY 2026 and a favourable interest rate scenario, affordability levels are expected to be supportive of homebuyer demand in 2025.' While the Indian economy is not insulated from the volatile geopolitical and economic environment, it continues to enjoy a relatively favourable economic growth and inflation environment. This has supported income growth and enabled lower interest rates which have in turn helped improve affordability despite the increase in residential prices. Incidentally, affordability levels are now at their best since the pandemic and are significantly better than the levels seen at the end of 2024, just before the first rate cut announced in February 2025. In Mumbai, the affordability index level improved by over 2 percentage points, moving from 50 percent in 2024 to 48 percent in H1 2025. This is the first time in the history of the index that Mumbai has come below the threshold of 50 percent mark which is considered the outer point of affordability. Mumbai's market which has always been above the threshold has now become more affordable due to the reduced home loan rates. Affordability levels have marginally worsened in NCR during the same period with households now needing to pay 28 per cent of their income for acquiring an average property in the city instead of 27 per cent in 2023. This can be attributed to the steep increase in residential prices which have eclipsed the impact of the interest rate cuts in the NCR. The RBIs neutral stance and intent to keep interest rates stable is expected to sustain affordability levels in the near term. The interest rate cut and CRR reduction in H1 2025 have significantly enhanced liquidity in India's financial system by unlocking substantial funds for lending and reducing the cost of borrowing. This infusion of liquidity should spur credit expansion and benefit both developers and urban homebuyers, thereby providing a boost to the broader real estate market. UNI KNR RN
