Thursday, June 28, 2012

Rising rental rates - dream of affordable housing is sinking further deep

Home is one of the basic requirements for any human being. At the end of the day what we need is some space to spend the night. It looks like this basic thing is also moving further away from us. For staying, people are using either their own home or rented one, for those who are working/ studying far away from home, the second one is a better choice. But in these days, rising cost in real estate, cost/rent for a home/flat/apartment is making it unaffordable.

According to recent Business Standard report, India witnessed 12% hike in housing price for January - March quarter of 2012; third highest in the world!!!

It's my fourth year in Bangalore, we don't have to see the graphs and studies to realise the cost of Real estate. During these years city witnessed a huge growth on rental rates. In the main areas now it is difficult to get a 2BHK (2 Bedroom, 1 Hall, 1 kitchen) house under 10K/month, even in the city limits rate is touching 10K. This comes with the added baggage of heavy deposits. Now, it is difficult to find even a 1 BHK flat for anything less than 5000-6000/month. Around four years back we got 1 BHK flat for 3500/month even though it was located far from the main road!!!

There is no doubt that, this will become worse. I can see the hurry of construction activities in some of the empty areas - where people didn’t even dared to walk around three years back. Now the same place is virtually transformed in to a crowded residential area. Still people are struggling to get a flat on rent. It looks like the building activity is much more intense than any other normal business activities; still the sector is unable to cater the needs of people - especially in the segment of affordable homes. After food, rent may be the biggest expenditure for a normal person.

Some solutions

1. Low cost but big housing projects are required in the cities - especially in the city limits.
2. Another one is to have an authority - like TRAI in Telecom - to regulate and streamline the real estate sector. This will help to save the customer from arbitrary increase in rent, deposits etc.
3. Plan the cities in such way, so that it can accommodate future expansions.
4. Methods like compulsory rain water harvesting and other innovative solutions should be used to save the resources.

Our lease will expire by the end of this year only. But now itself we have to start thinking about the possible increase in rent!!!


India sees 3rd highest rise in housing prices in jan-march - Business Standard
Photo Courtesy - Wikipedia

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