The fascination with real estate particularly the dizzing rise of property rates has been a dominant theme in the Indian realty market. Property prices have touched dizzying heights and people have realized tremendous profits both cashed & latent. What needs to be asked is what is driving the realty market. Ofcourse the answer is simple..its demand. Now dig deeper .. where is the demand coming from? The demand is clearly in the top of the housing need domain. The demand is primarily being fuelled by second & third purchases. It is being aggravated by dollar power (paradoxically dollar is being weakened, however still carries some clout). NRIs investing in India for better returns. The rise continues, the speculation intensifies. .. where does it leave the common Indian?
The questions that need to be asked are 1. What is the increase in the % of Indians having standard owned housing? 2. How is the speculation in housing real estate discouraged.
What needs to be done 1. Substantial incentivization for 1st purchase of house of value < Rs 50 lacs. May the to the extent of entire refund of interest component as IT discount. 2. Second purchases to get no incentive. Channel the savings to provide affordable housing to people below the income tax bracket. 3. Surcharge tax of 15 - 20% on dollar income fuelled housing purchase. If 50% of the income in the last 10 years have been in forex then this should be applicable. To be used to offset expense in case 1
