House Prices in India – How High, and for How Long?
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The paper is published in The Economic and Political weekly. It was first published as a CSEP Working Paper.
Abstract
A significant proportion of India’s population lacks access to decent housing, despite successive governments implementing housing affordability schemes. Why housing is expensive in India and what explains the tepid increase in house price growth over the last seven–eight years needs to be understood to address the challenge. Housing is expensive, with a price-to-income ratio of 11, more than twice the affordability benchmark of 5. High house prices are due to structural issues afflicting the real estate sector, such as inefficiencies in land use planning and implementation, semi-transparent nature of the real estate market, and a pervasive shadow economy. These issues and a less-than-competitive industry structure reinforce high prices. To make housing affordable, the focus should be on releasing developable land supply transparently through rigorous land use and implementation.
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The Centre for Social and Economic Progress (CSEP) is an independent, public policy think tank with a mandate to conduct research and analysis on critical issues facing India and the world and help shape policies that advance sustainable growth and development.