It is a dream of most Indians to own a house in their lives in India, but that dream is often unfulfilled because of two main reasons number one, it is just too costly, many of these housing projects never get completed.
So two questions arise: Why is housing so costly in India, and number two, why are many of these housing projects never completed? To answer these questions, we have to rewind the clocks to 2004. Between the years 2004 and 2008, India witnessed a huge economic boom. We were doing very well financially, seeing this economic boom. A lot of builders took this as an opportunity and started building a lot of projects. Not only was the number of projects too many, but many of these housing projects were extravagant. However, all this came to an abrupt halt in 2008 because we witnessed the global financial crisis in the year 2008.
The global financial crisis led to a worldwide recession, and in India alone, nearly 500,000 people are said to have lost their jobs. There was no way during the year 2008 that people could afford a house, so in the year 2008, because of the global financial crisis. The demand for dwellings went down because there was no way someone from the middle-income group could afford a 2 BHK costing one crore savings for a house per your 1 lakh 2BHK costs one crore time required to save one crore precisely 100 years.
So the number of unsold houses kept increasing, and the only way to sell these houses became that you have to reduce the prices; however that was not possible and to understand this, we have to look at things from the builders perspective seeing the global financial crisis the builders believed that people are going to recover from this crisis and once again start investing in houses. So they kept those unsold houses as it is and start constructing new projects snow how they build these new projects it was simple they started taking loans from banks to take a loan from a bank you have to pledge a collateral.
What is the meaning of the word collateral to understand this take the example of you go into a cafe you order a lot of food you ate your food you enjoyed your food and while paying the bill you suddenly you realize that you have left your phone and you are wallet behind so the only way to spend your account is for you to go back home and get your phone and wallet and pay the bill so now you have to tell the waiter that here’s my watch and I’m going to leave my eye right here while I go back home and get the money so that watch that you leave behind is the collateral that you pledged in the same way when those builders take loans from banks they have to engage a collateral and the collateral that they do promise is the unsold apartments so there is no way for them to reduce the price of those unsold apartments because that would mean the value of the collateral promised would be reducing and banks would question the builders and ask them to give more money as collateral there is also another reason why the prices cannot be relieved of these apartments and for this you must understand that the cost required to complete the construction of these apartments keeps increasing as the years go by so if the prices have to reduce that would mean that the builders are making lesser and lesser profits as the years go by and possibly they would go into bankruptcy so now the question arises is the government doing anything to help these builders in completing their project so that people eventually get their homes and the answer is yes.
The government does have real estate bailout packages, which they have announced to help them complete their projects. Now, what about people.
Who wants to buy a house and avoid the risk of getting cheated because the worst thing that can happen is you put in money for a home, and that project never gets completed and to answer this, there’s only one word that comes to mind RERA.
RERA stands for real estate Regulation Authority, so if you are a builder and build a project, you can’t do a project just like that. You have to get this project approved by RERA. So RERA is an authority that ensures that there are no unaccounted funds used in this project’s construction. It also provides the timely completion of these projects, so that home buyers eventually do get their homes. If a builder has a project that RERA has not approved, that builder faces the risk of paying a huge penalty or up to three years in imprisonment while investing in the house. What homebuyers need to keep in mind is to check if RERA and approves that project. This would ensure that your real estate investment is safeguarded. You do get your house on time.