Why can’t a lot of us buy a house in India?
Let’s imagine that you want to buy a house in Mumbai. Why Can’t A Lot Of Us Buy A House In India? You just got married and so you want to buy a house for your family. Since prices might make you wonder how you will buy a house in the cities of India. This is the problem of the property market in India and the factor responsible for this is corruption in India. Three major reasons are responsible for such a state of the property market. these cities have a lot of people and not a lot of lands. But while other cities like Shanghai and Hong Kong have tried to resolve this problem by building tall buildings, Mumbai hasn’t.
Why is that?
Floor Space Index or FSI.
It’s a mohair reason why houses in Indian cities, are so expensive. Now ‘I’ll tell you what is it. FSI is what decides the maximum amount of floor space that can be built on a given plot of land. now, I will tell you the main problem. While the FSI of Mumbai is 1.3, the FSI of Shanghai is 8, Hong Kong is 12, New York is 15 and Singapore is 25. This means that in a 100 square meters plot, a developer can make 1500 sq meters of space in New York, While in Mumbai, he can make a floor space of only 130 sq meters.
If you take a look at the FSI of other Indian cities, their state is almost the same. This means that you won’t get to see very tall buildings in Indian cities. Now, if the land is limited and the population is increasing, this would drive up the cost of houses. The prices of houses are increasing and so is inflation. Now, most of you think that with the level of your income, buying a house is almost impossible in big Indian cities. Because the incomes are not increasing as fast as the increase in the prices of houses.
Now, you might wonder why the FSI of Indian cities is so low. The main reason is that the government believes that if it increases the FSI, our cities which are already overcrowded, would attract more people. But that is not true. What’s going to happen is that by increasing FSI, residents will have more space. increasing FSI in India could also lead to lower rental rates for people This would benefit even those youngsters that come to big cities in search of jobs. Anyway, such graduates, especially engineering graduates are offered an annual salary of only 3-4 lakhs per annum.
Increasing the FSi is not up to us, but brands like Scaler can help us secure better jobs. Now let’s talk about the second factor – Black Money. There is no water or electricity at all. But a two-bedroom, 1,000 sq ft house costs about INR 1 crore. Now if you want to buy this flat, you’ll have to pay 1 crore plus 12 percent GST and nearly 8 percent stamp duty. That is – 1 crore for the house and INR 20 lakhs for taxes. The developer would tell you that you need not pay the 1,20 crores in white.
You need only pay the circle rate of the house in white money. This would save you money. This is the way used by people who have hoarded black money they hide their black money by investing in properties. The black money is put to use and they also save up on taxes. There are scores of people in India who opt for techniques like these. investing in property is one way to turn your black money into white. Often these people are so desperate to convert their black money into white, that they end up buying houses over the market price This is why housing prices get escalated for normal buyers. This is the situation in Indian cities.
The final reason is bribery. So, for a house that would cost INR 1 crore without corruption, you might have to pay INR 1.5 crore because of it.
In such a scenario, how can a common man buy houses in Indian cities?
hopefully, you like this explanation.