Why are house prices so high in India?

In Focus by The Hindu

Housing is a basic requirement for dignity of life. But affordable decent housing remains a distant dream for most Indians, especially in urban India. Close to 17% of all households in urban India live in slums, with this percentage shooting up to 41% in a city like Mumbai and 29% in Chennai.

Over the years, the government has taken many initiatives to address this problem, with schemes such as Indira Awas Yojana, and the ongoing Pradhan Mantri Awas Yojana (PMAY), an interest subsidy scheme for lower and middle-income groups. But these subsidy schemes hardly seem to make a dent on the housing crisis. The gap between people’s incomes and price points of housing stock, especially for the aspirational classes, remains wide.

Why is housing in India so expensive? Why do the prices never seem to come within reach for most? A recent research paper, titled ‘House prices in India: How high and how long?’ co-authored by three analysts from the Centre for Social and Economic Progress (CSEP), Shishir Gupta, Nandini Agnihotri and Annie George, offers some insights on these questions.