Private builders as well as government bodies like the Mhada and Cidco have in the last few years tripled the property rates, despite recommendations to revise the prices to bring them on par with the purchasing power of the citizens.
Yashwant Dalal, president of the Estate Agents’ Association of India, said that the pressure to reduce prices to attain parity with the purchasing power of people is mounting on builders. Until the issue of affordability is addressed, the real estate market, especially that of the city, will continue to be in doldrums.
“Everybody knows why the builders are not reducing the rates, despite a low demand from the buyers. But, the situation is such that the buyers will continue to wait and eventually force the builders to reduce the rates,” Mr Dalal said.
Advocate Vinod Sampat, an expert on real estate issues, is of the view that the government is just as responsible. He said, “The government is indirectly helping the builders by not taking action against them. It must take criminal action if a builder fails to comply with the statutory obligations. Checking the builders’ books and ensuring that they are complying with the laws will not just regulate the prices, but help the entire housing industry,” Mr Sampat said.
However, an official of the Maharashtra Chamber of Housing Industry (MCHI), a noted state body of builders, said that the cost of the construction materials like cement and steel, as well as the government policies have forced the builders to increase prices,” adding, “Mhada and Cidco have also been increasing property rates.”
Executive editor of a real estate daily, Sanjay Chaturvedi, also held the government responsible for the escalating prices and hence, the unsold flats. He said, “When Mhada has tripled its rates in the last couple of years, why should the private builders be behind in this money-making game? In fact, Mhada’s decision has encouraged the private builders.” He further said that the government should through its agencies like Mhada and Cidco sell its flats at affordable rates.
However, the Mhada officials justified their rates on the grounds that they needed to cross-subsidise the economically weaker section or mid-income group customers by charging higher prices to the higher income group. “We sell the flats at no-profit, no-loss basis at carpet rates only. So, there cannot be any comparison between Mhada and private builders. Secondly, we charge a bit higher prices than the ready-recknor rate at two-three locations, just to cross-subsidise the economically weaker section or the mid-income group,” said Vaishali Wagh, PRO, Mhada