Dream home, out of bounds

MUKESH, in his early twenties, was working as Sales Executive for a Noida-based mid-size company. As his marriage was about to be finalised, he started looking out for a flat that his meagre budget allowed.  Eventually he bought one at Indirapuram, Ghaziabad, for INR 9 lakhs, thanks to bank finance. The EMI (equated monthly installment) was equal to what he would have paid by way of rent for a similar flat at Noida. In two years, the value of the flat had appreciated to INR 25 lakhs.  Mukesh then sold it and settled the bank loan. Emboldened by the experience, he bought two more flats nearby and sold them too in a similar manner for a handsome profit. Eventually he quit his job to become a full-time property dealer. Admittedly, he had not dreamt that the property boom would bring such a windfall. He does not regret quitting his job and has no complaint whatsoever.

Similarly, a Software Engineer booked a DLF flat in Gurgaon but by the time it was allotted to him, its market value had quadrupled; he sold off the flat and is now more into real estate and less into software development.

These two are not isolated examples; real estate has become a lucrative activity for thousands of software professionals too. Early birds have reaped huge rewards. None could have amassed such wealth from salary income alone. The property / housing boom has been so widespread that whoever invested has reaped huge rewards. High returns, in quick time, have attracted so many people that it has just become an investors’ market. Price correction has failed to dampen the spirits of the investors.

But this boom has proved disastrous for the conservative majority, who park their money in safer avenues. Surging property prices have made it virtually impossible for those from the lower middle income group to buy even a utility flat. The hike in interest rates has made matters even worse. A two-bedroom flat costs more than INR.25 lakhs. How many people, depending on salary income alone, can arrange this kind of money? Even a Class- I officer of the government of India cannot accumulate this kind of money from salary income alone.

A correlation between the stock market and property prices is a well-established fact because those who gain from equities invest part of their income in tangible assets. There are thousands of investors who have gained from the booming stock market.  Those who gain from a booming stock market chase property all over and buy it, irrespective of the cost. Since it yields even higher returns, hordes of people gravitate towards the real estate and property sector everyday.

But this is not the sole reason behind the unprecedented boom. The credit must go to the previous NDA government which for the first time ever ensured that a dream house was within reach of the common man. Property prices ruled cheap and ample finance was available at cheap rates. But the scenario changed when the government changed.  The price of everything started moving northward.  Now a house or flat is beyond the reach of the common man. 

Government agencies responsible for this consequence simply sit idle; some of their officers are always on the prowl to trap some innocent victim or the other and make some quick money.

Meanwhile, private builders are thriving under their patronage. How long will the government take to tame corrupt institutions and formulate some concrete measures for the welfare of its ordinary citizens? One can understand that the government has to keep an eye on the vote bank.  But surely it should keep its other eye wide open to appreciate the plight of those belonging to the low income group. Will the government ever wake up?