Future of Housing Sector,Boom or Doom?

Future of Housing Sector,Boom or Doom?
- Questions real estate consultant siva.
Influx of people and money at the same time might help the city to grow. Study of the spending pattern of the people will also signify the growth area. Demand for a product/service arises from the purchasing power as well as the surplus income/disposable income. The housing sector is one such area where a sudden boom carried the green city bangalore to unprecedented levels. As always the trough follows the crest, many feel its time for the doom.
The major offerings from developers range from Sites to Apartments to Town houses to pent houses to Independent houses to Multi level houses to villas to resort houses to farm houses in various size, shape, color and more importantly price. Bangalore has witnessed a spurge in apartment culture and more recently, thanks to BDA affliction, Lots and lots of independent house project are booming up. This can be witnessed from the sudden up rise of independent house offerings from leading developers. Starting from Purva's Parkridge, SP Samruddi (of SP Spruthi fame), Kristal, Chaitanya, Ittina, Adarsh, all developers are offering independent villas to the growing market of bangalore. But is the boom time over?
What worries our stereo-typical middle class salaried investors and the effervescent ubiquitous real estate developers are the implementation of Kelkar committee by the new government. Even though housing market was little influenced by tax rebates, the absence of it might affect our stereo-typical society which benefits to a great extent by the income tax rebate. For example, a 15 Lakh loan for a house/apartment will qualify for a full rebate of 1.5 Lakh on interest and Rs.20,000 on principal. With an EMI of Rs.12,000 and savings on house rent of about Rs.5,000 and tax rebate of Rs.5,000, a mere Rs.2000 from one's hand will fetch a house. If Kelkar committee report is implemented, then it would be on a step-by-step reduction of the tax benefits and not a complete wipe off of the rebate from the radar. The committee advices to reduce this tax sop by Rs.50,000 every year, with a clean wipe on the third year.
The rational behind such an advice arises from the comparison of the developed nations. Unfortunately, No comparison can be made with the developed Nations of the West, USA, ASEAN or even China. India has the lowest per capita income. It’s sizeable population is below the poverty line and cannot have two square meals. It has 4% of the World’s resources and 16% of the World’s population and an adult franchise viable democracy. The other developed Countries are having very small population and much larger resources in comparison to their population.
Certainly our stereotypic society will experience greater pain. The interest limit was raised from Rs. 30,000 to Rs. 1.5 Lakhs in last 3 years after lot of consideration and to provide shelter to all. Whether housing problem already over? It reminds me of “Roti, Kapara or Makan”, which is still relevant for us, Indians. After levy of tax on perks, employees can’t really afford to go for a flat, without Govt. support.
This policy helps and is helping lot of families to cherish their dreams of a house whichever way it is. One can go through the pages of history that the value of land never depreciates unless a major disaster happens. Now, it’s certain that the days of doom are near. Not for the housing sector, but for our Stereotypic society!!!