Despite the government’s focus on affordable housing and the launch of ambitious schemes like PMAY, homes still remain unaffordable for many in India, especially in major cities. So, the question is: what makes housing unaffordable and what can be done to help make cities more livable and sustainable for everyone?
In a past video posted on social media, Dr. Niranjan Hiranandani, Founder & Chairman of the Hiranandani Group, and Chairman of NAREDCO, discusses the core reasons behind housing unaffordability in cities like Mumbai.
According to him, one major factor is that up to 50% of the price of a home is consumed by taxes and levies, whether through GST, stamp duty, or other government charges. This heavy taxation significantly raises the overall cost, making it harder to deliver homes at affordable prices.
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Another challenge is the impact of the ready reckoner rate, which sets a minimum price for property transactions. Due to this, offering homes below a certain price becomes impossible, which directly affects affordability. Developers are often left focusing on compensating slum dwellers for rehabilitation projects, limiting their ability to provide affordable options for other buyers.
Additionally, the ease of doing business in the real estate sector needs urgent improvement. Lengthy approval processes, outdated regulations, and high compliance costs slow down projects and inflate costs for both developers and homebuyers. A broader solution lies in better city masterplanning. “By improving infrastructure, transportation, and overall living conditions, cities can enhance the quality of life for residents. A well-planned urban environment that balances affordable housing with efficient services will help make cities more livable and sustainable for everyone,” he suggests.
Here is what Dr. Hiranandani says in the video: “If you buy a house from me in Mumbai today, 50% of the money goes to the government directly or indirectly. Whether it is in terms of GST, stamp duty, additional FSI rate, etc. Number two, I cannot give you an affordable house. The reason is the ready reckoner rate shows that you cannot do it. So, they have purposely increased the prices to make the houses unaffordable. So, either you give it free to the slum people and compensate them for that purpose so that they give them free and make the public happy.
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