By Abhishek AnandAffordable housing has gone for a toss in the satellite cities located in the National Capital Region (NCR), including Noida, Ghaziabad, and even Greater Noida.
Most housing projects located in these regions were once promoted as affordable options for millennials who moved here for work, but the situation has changed drastically after the Covid-19 pandemic.
Apartment prices in these areas are up nearly 25-30 per cent, putting them out of reach of most middle-class families.
Homebuyers blame big real estate players for unanimously increasing rates that have forced them to buy properties in areas beyond these cities.
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“The big builders have recently come to Noida and Ghaziabad. They have created this bubble of branding and seeking an additional Rs 3,000 as brand value from the flat buyers,” said Abhishek Kumar, president, Noida Extension Flat Owner’s Welfare Association (Nefowa).
While Kumar agreed that the cost of construction of these properties has increased, he added that this is not the main reason behind the sudden price rise.
“Earlier, the medium and small-scale builders used to compete over rates and fair competition led to affordable housing. But now, the flats that used to cost Rs 55 lakh two years ago now cost Rs 75-80 lakh in areas like Greater Noida West or Noida extension,” he added.
“If a flat of 1,000 square feet costs Rs 70 lakh, a person will have to pay Rs 20-25 lakh in hard cash for downpayment and registration. Then he/she will have to pay an EMI of Rs 50,000 for the next 20 years. How will a middle-class family afford this?” he asked.
“How will they pay for their children’s school fees and other expenses if all the money they earn is gone into a flat? The government must come into the picture and to complete the dream of PM Modi of affordable housing for all, capping and monitoring of the price is important,” added Kumar.
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Big players responsible
While major real estate players buy bigger land parcels and clear their dues immediately, they get preference from the authority in leasing out land. The monopoly started when these builders started seeking more money without providing any extra facilities. The Builders’ association, however, seeks supportive policies for affordable housing.
Manoj Gaur, President, Confederation of real estate developers of India (CREDAI) NCR and CMD Gaurs Group, acknowledged that lack of affordable housing has become a significant challenge in NCR.
“Land, being the most important component in the pricing of houses, has seen an unprecedented increase in prices along with compliance costs. The once-affordable localities have become hotbeds of premium properties due to limited availability and high demand,” he added.
He went on to say that CREDAI has given various representations and requested an increase in incentives available for affordable housing. Gaur said this can be done by “tweaking the definition of affordable housing”.
“The government must focus on creating a supportive policy environment for affordable housing and incentivise developers to build affordable homes to ensure everyone has access to safe and decent housing, for which the demand is enormous,” Gaur said.
It has also come to light that builders are seeking a loan for the completion of projects from private lenders, some of who charge a whopping 23-25 per cent interest on the amount. This can ultimately lead to increased rates of apartments.
And since there is no capping on rates for residential or commercial properties, many major real estate developers and builders are charging more for apartments.
“Any builder will have a construction cost of Rs 2,000 per square foot. Adding the rate of the land, the total cost of construction of one flat is about Rs 3,000 per square foot. Now, if the builders are trying to make 60-70 per cent profit, the government must come into the picture and stop it,” said Kumar.
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