India already has more houses than households – A revelation.


Real estate and gold are the two asset kinds that Indians prefer and the Indian’s love for real estate is an obvious fact. You may be wondering what is so special in that. There are reasons which will come to light as you read on.
  
In his new book titled “The Making of India – Game Changing Transitions” Akhilesh Tilotia, a thematic researcher in the institutional equities of the Kotak Mahindra Group brings up an interesting point. He goes ahead to state that India is in a curious position with more houses than households. 
The data he supplies to back up his statement is from the census 2011 which states that the number of households in India has increased from 60 million to a whooping 247 million and between 2001 – 2011, the rise was from 187 million to 247 million. In this period the number of houses went up from 81 million to 331 million which is an addition of 250 million more houses. Thus Tilotia states there is a supply of 38 million new houses for 24 million new households.

Why such a disparity? What has actually happened? The explanation given in the book is that the housing units are being bought as investment and not for the purpose of dwelling. This actually implies that many Indians own more than one house and there are many who do not have any houses at all because of the higher prices which are beyond their reach. As the Indians like real estate more than any kind of assets, lot of the properties,reviews are given by customers houses are built and bought just for catering to the demand of investment.  

The critics are often found to say that “The economy is built on evidence.” The market regulators opine that there are many properties which are built for investment cycles. Or else why would we see properties mid way on the road to Agra? These are needed by the businessmen when they collectively go for it and these properties are being sold, bought and resold. No body ever lives there. These are  bought by the business men who have black money and thus do not bother about the location of the properties. This probably explains why the number of houses are more than the households in India. It also explains why there are properties and houses miles away from the busy and bigger cities of India and why are they so expensive. 

The question is what is the answer to this problem. How can we give access to the houses to the people who need them and how can we build houses where people can live in. The economists and the critics say that government needs to find ways to unearth the black money which has been bought as real estate in the country rather than the money that has left the country. 

The economists insist that reduction of black money and its generation will lead to better tax compliance meaning more income for the government for the development of people. This can also reduce the amount of black money which goes into real estate among other asset investments. This certainly needs a more firm and strong political will of many years to be executed. 
The next thing that is demanded by the critics are agricultural tax as they find no justification of rich farmers not paying tax. The market watchers feel that in cities like Chandigarh, Shimla and few cities in the NCR the untaxed agricultural income is responsible for real estate investment and the subsequent increase of home prices. 

This is in tune with the Modi Government’s pledge of affordable housing and the government should see that it is implemented in a large scale. The statistics say that nearly 30 percent of the Indian population stays in the Indian cities and this number is expected to increase to 50 percent by the turn of 2030. They further warn that with this increased influx of population from villages to cities the slums are bound to increase if the government does not implement affordable housing on a large scale which is not at all desirable.

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