Saw this chart and genuinely had to pause. If the richest families in Maharashtra need over a century of disciplined saving to buy a basic home in Mumbai, what’s left for the rest of us?
I know lump-sum saving is nearly impossible for most, which brings me to SIPs. What kind of SIPs do people here think are realistic to bridge even part of this gap?
Makes you question everything:
- Why are we still obsessed with home ownership in metros?
- Should we really be doing SIPs in mutual funds, hoping for a house 20 years later? Great, but how long till they beat property inflation in Mumbai?
- Rent forever and invest in everything but real estate? Or just give up and call it “manifestation”?
To be fair, housing has become a global issue.
Ever since Real Estate turned from a commodity to an investment, housing has become crazy unaffordable. I think India might be an edge case in this regard. A lot of demand is coming from people genuinely wanting a place to live rather than hedge funds. There is also chronic under supply in the urban areas given the large migrant inflows from more rural areas in search of opportunities.
On the other hand, Real estate is one of the investment vehicles used to invest “Black money”. Housing would become much more accessible if this crappy practice can be stopped. The current system with “circle rates” just isn’t working. The issue is much more systematic. You need to lower capital gains tax to make sure that people only want to sell if they get the entire capital in their bank not in cash. You also want to lower taxes so more people have the capital to actually purchase homes. The investments of Black money in real-estate would start to move towards stocks and bonds while freeing up housing inventory.
There have been suggestions on restricting the number of units which one person could hold or prevent NRIs from buying property. Even increasing property taxes on a local and central level. I think such measures only add more friction and make a first time purchase more difficult. Restricting capital flows specially on an individual level never helps.
The best, fastest and easiest solution however, is simply- BUILD BUILD BUILD. And cut down on Red tape as much as possible. A common trend with Indian government is, the more local the government the worse the processes. Central government has kind of figured out its digital stack and is now using it to fast track all sorts of permits. State governments are all over the place and are trying to build these systems but not to much success. Local Municipal corporations in places like Delhi and Mumbai are horrible at this. They can’t get anything done properly and I think it is about time we have a discussion about the very existence of these bodies.
I was trying to pay property tax for my places in Delhi just yesterday and wow is MCD’s online portal a mess. It is horrific. It makes me miss the income tax department website. This should all be centralized. Same with building permits. Building is difficult and requires crazy amounts of bribes to be given to everyone from Local to State and on occasion central government officers. Less Government Intervention = More housing supply.
Given the undersupply we are living through, I would propose to suspend ALL building regulations other than safety regulations.
