Real Estate hitting the bottom

By Murari Chaturvedi

The following table tells the stark truth about the property purchasers:

Number of taxpayers in India & their slabs (in million)
Tax Slabs (RS) No. of Taxpayers % of Taxpayers
0-5 lakh 28.84 89.00
5-10 lakh 1.79 5.50
10-20 lakh 1.38 4.30
20 lakh 0.41 1.30
Sources :Standing committee report on OTC

According to the above report which was published recently the biggest segment of the tax payers is of the persons earning Rs. 5 lakh annually in the entire country comprising of 28.84 million tax payers and which constitutes 89.00% of the total number of taxpayers. Even with an annual salary/income of Rs 12-15 lakh you might not be able to buy a decent house in any of the top metros. But this segment of Rs.12-15 lakh, as per governments is eyes belong to the super rich category. Even this category of super rich people is in no position to buy a decent home in Mumbai. In most of the areas on western suburbs a modest flat of around 500 to 800 sq ft and above are priced at Rs. 1 crore and above so even if you earn Rs. 12-15 lakh per year, there is no possibility of your acquiring a flat in Mumbai. Percentage wise the number of persons in this category is only 4.30 millions in the whole country. The inventory of unsold flats is rising in Mumbai and is said to be having 39,295 unsold flats in January 2013. More or less same is the position in other metros cities of the country. For purchasing a Rs. 1 crore flat you will get housing finance up to 75%. That means you will get Rs. 75 lakh and to service this loan you have to pay up to Rs. 1 lakh per month to the housing finance company in equated monthly installments (EMI). So the person earning Rs. 5 lakh to Rs. 20 lakh doesn’t qualify for the loan. In the mean time inventory of unsold flats is rising and a lot of money is blocked in such unsold flats. In such a condition the developers has to construct affordable houses. But in city like Mumbai where the land prices are sky rocket it may not be possible. It is time when the government and the developers should sit together to find out the solution to come out of this situation.

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