The unprecedented response to the Congress’s ‘Ghar nu Ghar’ promise is proof of how unaffordable housing has become for the common people in Gujarat cities. In Ahmedabad, houses have become costlier by 8-9 times in the last 12 years. Interestingly, the state government’s ‘policy paralysis’ is held responsible for the sky-rocketing property prices in city.
The Ahmedabad property market has witnessed a steady growth of around 10-15% but it zoomed only after 2005. In the last seven years, houses have become costlier by more than five times with the lower income group (LIG) and middle income group (MIG) being worst hit.
Property prices are governed by three factors: cost of land, construction cost and builder’s profit. The state government cannot intervene to control input costs. It can’t restrict land prices either as land parcels are held by private parties. However, it can certainly intervene with policy decisions to provide more floor space index (FSI) and redefining zones, say developers. l The land cost component of residential housing projects has gone up drastically, from around 40-45% in 2000 to 60% at present. “The state government has created an artificial scarcity of land thereby making it costlier. Had the government provided higher floor space index (FSI) to developers, more houses could have been built on the same space, thereby making them affordable,” said Jaxay Shah, national vice-president of Confederation Real Estate Developers Association of India (Credai).
Developers also believe that the state government has failed to understand the housing needs of people and review housing policy accordingly. Land parcels in residential zone-I (R-I) have been decreasing making land in this zone costlier by the day.
“Since 1997, it has not increased by even a single square kilometer area in R-I zone. If the government had released more land, then housing prices in the city would have stabilised and on peripheries they would have come down,” said NK Patel, director of Real Estate Studies and Management Academy.
Realtors believe that providing affordable housing to people is the government’s work and the onus for that does not lie on private developers. The government should have reserved plots for mass housing projects.
“The state government used to reserve plots for residential and commercial development when land deduction under town planning (TP) scheme was 17%. Now it has been increased to 40%; yet there is a scarcity of such plots,” said Suresh Patel, vice-president of Credai-Gujarat.
The state government’s development authorities levy betterment tax on landowners even after deducting 40% land for creating various amenities like roads, drainage, gardens, etc.
“Why can’t the state government build mass housing schemes for LIG and MIG who will then have to pay only the construction cost?” asked a developer.
He also went on to say that a majority of politicians have their black money invested in land. “If the government comes up with reforms in policy, the market will crash and affect profits of a few influential people in the government. That is why the government is not coming up with reforms,” he alleged.
Source: www.dnaindia.com
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