Kochi, India: Affordability of property buyers

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High interest rates together with rising property prices have adversely impacted the affordability of property buyers. However, demand for the same is apparent and persistent while expected to become stronger and more intense in near future.

Despite the real estate witnessing boom in last couple of years, Kochi has a housing shortage that is estimated to continue for a long time. With rising income, growing middle class and rapid urbanization, the demand for housing is projected to shoot up further.

India’s per capita income has doubled over the past 20 years as a direct result of rising income. At the current rate of growth, the per capita income is expected to quadruple by the year 2020.

With the re-pricing of interest rates in the last four years from 7% to 12% and the escalating property prices, there has been a slowdown in the residential market. This fact signifies suppression of demand rather than absence. While it is necessary to curb the flow of speculative money, it needs to be understood that augmenting the land supply for development would go a long way in easing the demand pressure on prices.

Prices of Kochi flats and apartments have almost doubled over the past two years and this has greatly reduced the affordability of the middleclass family. There are a number of rich apartment buyers and investors; however, the greater majority of customers in Kochi as elsewhere are the working middleclass. It does not speak well of a society that discounts the needs and requirement of its middleclass.