General

Can middle-class people own a home?

By Real Estate Desk 2/24/2024

Owning a home is a big dream for anyone, especially for the middle class. There are many reasons why they cannot buy a house. Two housing schemes have been announced in the recent budget by the Centre. One of which is that two crore houses will be taken up under the Pradhanmantri Awas Yojana Gramin scheme in the next five years, while the other is a scheme planned especially for middle-class people living in rented houses and slums to build or buy their own houses. According to the 2011 census, 17 percent of all urban households in the country live in slums. But in big cities, it is more. 41 percent of people in Greater Mumbai, 30 percent in Kolkata, and 29 percent in Chennai live in slums. Although governments are trying to solve this problem, the issue of houses for all remains the same. Actually, building or buying a house in the country is very expensive.

The average price-to-earnings ratio (PE) is 11. That means an average family needs 11 years of income to buy a 90-square-metre apartment. While it is available in countries like America, Australia, and Germany, the PE of countries like Bangladesh, Sri Lanka, and China is worse than that of our country. There are two main reasons for the rise in house prices. The rise in prices over time is one. Construction reasons are another. Experts say that reforming the land market is the best way to change this. It is said that this will increase transparency in the real estate sector and improve the ability of buyers.

Between 1991 and 2021, house prices in the country increased by 9.3 percent on an annual basis. Meanwhile, the average PE of the countries with the most transparent real estate industry is 8, while the average PE of the countries with the least transparency is 14. Although our country has been one of the best improvers in the Asia-Pacific region over the years as a result of reforms like RERA and digitization of land records, it still ranks semi-transparent. The main reason for this is the absence of reliable and rigorous land use planning. Only 28 percent of cities in the country have adopted a master plan. In this context, improving the affordability of buyers and releasing land supply in a planned and transparent manner will make the dream of owning a home a reality, say experts.