Delayed Clearances Increase Property Prices in India
One of the primary factors contributing to the surge in property prices in India is the delay in clearances for new buildings. The Economic Survey 2013 attributes this issue to the government's inefficiency in processing clearances, leading to a significant hike in property prices.
Property prices shoot up as a result of delayed clearances.
Report Findings
According to the Economic Survey 2013 report, property prices in India soared by 40% due to prolonged delays in clearances. Builders need around 34 clearances to start any project, a process that can take at least six months. During this time, property prices skyrocket.
The Economic Survey for 2012-13, submitted to parliament, highlighted various challenges faced by the housing and realty sector in India. The primary challenge cited was the undesirable delay in clearances.
The survey noted that the average time for all clearances is 196 days. This delay alone can escalate property prices by 40%.
Delayed clearances cause a hike in property prices, says ES 2013.
Challenges and Recommendations
Citing the latest World Bank report, the survey ranked India 182nd in construction clearance processes. Despite this low rank, India remains one of the top countries in terms of housing and workspace demand.
In India, land prices are rising rapidly. Apart from increasing land prices, challenges include higher stamp duty charges and difficulties in land acquisition. To boost the housing and real estate sector, these issues need to be addressed efficiently, the Survey added.
Some states still have the Urban Land Ceiling Regulations Act, and a lower floor area ratio restricts builders from constructing taller residences in cities.
Real Estate Sector Growth
The housing and real estate sector together form 5.9% of India's GDP. In 2011-12, these sectors witnessed a 7.2% growth. The Survey noted that the growth of realty services has been impressive, with consistent growth over 25% since 2005-06. The growth rate in 2011-12 was 26.3%, the Survey added.
The survey pointed out that the current financial year sees moderated property prices.