The Union Ministry of Housing is likely to introduce a bill to regulate the real estate sector in the upcoming session of Parliament this winter. A private business TV channel reports how this proposed law could help check the creation of a housing bubble in India.
Real estate prices have more or less remained firm in major locations across the country despite inflationary pressures, high housing interest rates and the ongoing slowdown in sales. Except for Kochi, Bangalore and Jaipur, housing prices in all the cities tracked by the Housing Bank of India have increased significantly over a period of five years.
The price index for Chennai has gone up by 209 points since 2007, Bhopal by 107 points, Pune by 100 points and Delhi by 72 points. According to a Nomura study, housing prices have shown an uptrend as supply has been limited with fewer projects being added, especially in key markets such as Mumbai and Delhi due to delays in the government approvals.
This would imply that demand is more than supply, but a Housing Ministry shows that nearly 62 per cent of the housing units that came up between 2007 and 2012 were either vacant or locked up.
By introducing this key provision in the real estate regulation bill, the Ministry hopes to check speculative purchases and artificial prices escalation.