High Land Prices, Taxes Make Affordable Homes Difficult To Built
High land prices, construction costs and escalating taxes have made it difficult for developers to build affordable homes, raising questions over the success of the government’s ‘Housing for All by 2022’ mission.
In the past decade, cost of construction and compliance, as well as land prices, have shot through the roof. According to realty researcher, Liases Foras, high land prices which have increased nine-fold in the past 12 years, making affordable housing a dream, especially in metros.
The cost of approvals to is higher in metros, where the working population is scrambling for homes. But high land prices in city centres are pushing developers to the periphery, where there is no demand for affordable housing due to lack of jobs, Liases Foras told.
However, developers believe it is almost impossible to construct affordable homes with a price tag that can match EWS or LIG families’ paying capacity. Recently in Delhi, over a thousand home buyers under the EWS scheme returned houses to the government as the plaster was chipping off, taps were not working and the buildings looked dilapidated.
The economics of building homes at low prices does not support homes that meet aspirational needs, says National President for NAREDCO – the apex body for real estate industry in India. Quality of construction is non-negotiable.
Moreover, he adds, “the concept of a ‘dream home’ has been romanticised to the extent that an EWS buyer wants something that is a notch above. But the agencies implementing these schemes say the tight budget does not allow for additional expenses.
Urbanisation is also increasing rapidly due to better employment opportunities in the metros and big cities. The result is a shortage of 19 million houses, with 99 percent in the Economically Weaker and Lower Income Groups.
The economics of constructing a house reflects aspects like the cost of land, construction material and labour. And it is a challenge to create a home that meets the aspirations of home seekers and also fits within their budget.
Gurugram-based town planner, says that since the cost of construction has gone up and also high land prices, it is beyond the reach of the common man to purchase flats from government agencies. Instead, the government should give plots of land of between 50 and 100 sqm with minimum facilities and let them construct on their own. This will be cheaper for the beneficiary as he will put in his own labour and can construct further whenever finances permit.
Already, builders are sitting on unsold inventory of over 9 lakh units in India’s top eight cities. This increases their financial cost and cramps their ability to fund new projects.
Source Link- https://www.thehindubusinessline.com/