Friday, December 21, 2007

Rising residential rates, and the real culprits

For me, its house-changing blues yet again.

For some reason, changing my place of stay has almost become a routine in my life in the past 7 or so years. This is the 12th time I’m changing my place of residence in the 7 years (I’m counting moving all my things from Y to Zee as one change). You could almost say I’m used to moving my things around, but I guess these are things you never quite get used to.

This time though, I’ve picked up a place at a hefty price in a seemingly ‘hep’ location in Chennai – Adyar, in Chennai (for those who know the area). Of course, when you got to stay in the area where things are currently ‘happening’ you go to pay the right price. And I am. A 2BHK comes at 15 grand a month and that in Chennai. That’s 180,000 a year, and I couldn’t help but wonder about the per capita income in India – it is 29,000 a year, which means there are a LOT of people (more than 50% of Indian population) is living with less than 29 grand the whole year. And of course, 15 grand a month is a nice salary even for Indian city standards. You could run a family, and not be a pauper!

When a colleague of mine told me he picked a place for 15 grand last year, I thought he had gone nuts. Who would pay that much and, most importantly, why would you agree for that price and slowly jack up the price for others too? It’s very unfair, but I guess you eventually fall into the very same muck that you hated looking at. These days, you just don’t find a place to stay if you don’t shell out this much.

Who’s the culprit, anyway? I guess it’s a combination of three factors – (1) A growing economy that pumps in more money with people, (2) Cockroaches - I mean, brokers, and (3) Shortage of housing supply.

If you are an economist, is there anyway to arrest these? You wouldn’t want to mess with (1), of course. As for (3), you could reduce interest rates so that the housing sector picks up, but it most certainly can’t match the march of the economic growth. That said, I have a big problem with (3). It’s unfair. I don’t want to shell out 15 grand for a broker that just directed me to a house. It’s a cartel, and a very unfair one. It's the definition of improper market. I’ll be ok with a max of 5 grand, but not this much, especially when I know that they have ALL the incentives to increase the rental rates since it would directly mean more money to their kitty. I can’t think of an immediate solution, but there is one – an internet enabled network for house owners and people seeking accommodation, a la Craigslist which seems to work in most global destinations. Of course, that isn’t happen going to happen any time soon in India what with our internet savvy population (sarcasm directly intended), and I better be looking at a house to buy.

P.S: Had a forceful blogging break coz of the shifting. And I haven’t fixed my internet connection yet.


At Friday, December 21, 2007 10:32:00 PM, Blogger Vimal said...

I guess 15k for a 2 BHK in adayar is not that expensive :)
On a serious note, this should come as no surprise to you if you have tried scouting for places in Bangalore or Mumbai. Chennai is just catching up now. It is an inevitable fallout of any booming city. The additional problem with chennai is that it's not even half as big as a mumbai or bangalore. Hence the situation will be far worse couple of years down the line. I see a few solutions:

1) Build better public transport systems which will enable people to travel from outskirts to the city, thereby both expanding your city and getting more housing space.
2) Bring regulation which will prevent short term buying and selling of property which I beleive jacks up prices(ultimately leading to higher rents) more than what it actually should be.
3) Forget everything. Go to Kerala or Coimbatore, join some IT company and live in peace :)

At Saturday, December 22, 2007 2:12:00 PM, Blogger Rouse said...

Vimal - the real estate prices in Coimbatore are not lagging that behind and some parts are as expensive as Chennai and Bangalore.

And Govar - I totally agree with you about the payment for broker. Can you just imagine - if he manages to find one such tenant- he makes 30k (15k from the landlord and 15k from the tenant). And that whole amount is tax free. Additionally, that amount is not taxable. There are other ways - FreeAds, Classified in major newspapers - but inspite of everything its only because of the mentality of the people that the brokers survive. The brokers hike up the price in some unbelievable proportion so that their commission goes up. I would brand this also a scam - similar to the auto meters and gas stations :-).

At Sunday, December 23, 2007 12:54:00 AM, Anonymous Anonymous said...

true..cockroaches everywhere and in Mumbai its worse! they have the guts to come and ask for commission for a house where u are renewing the lease??!?!?!?
BTW.. the indian property listing sites are on their growth path. India properties, mymakaan,99acres are all doing good. it may not be long before we break this cartel holding people to ransom

At Sunday, December 23, 2007 6:34:00 PM, Anonymous Anonymous said...

@Vimal: Machi... i liked your coimbatore solution better coz I already got a couple of houses stacked up there. :) But seriosuly, year, I know its gonna get worse in the coming days and Im gonna do someting about it!

@Bargava: Righto... its a scam alrite.

@Kevin: I hope machan... I hope that happesn fast enough but I got some doubts in some corners on the feasibility with our kinda internet (un)savvy population!

At Thursday, February 14, 2008 10:30:00 PM, Blogger சரவணப்பிரியன் said...

Go.. now there are few sites like sulekha.. where u can meet the landlords..

But on the other side of it.. this is also spammed by the brokers



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