Government consults realtors to cut home prices

Spiraling property prices and slump in home sales have forced the Union Housing Ministry to think out-of-the-box solutions. After the decision to set up a high-level committee to recommend policy interventions to facilitate creation of rental housing stocks, the ministry has now sought views from private developers and builders to evolve a strategy for reducing the time taken in approval of real estate projects that can help bring down the cost of houses.

The ministry, which has set up a committee to suggest ways to streamline approval procedures for real estate projects, estimated that a consumer could end up paying 25%-40% less if the timing of granting approval is reduced to only six-eight weeks.  Concerned about the growing housing shortage, the ministry wants to develop an acceptable fast-track approval for realty projects executed by private developers to bridge the huge accommodation deficit in the country mainly for Economically Weaker Sections (EWS) and Low Income Groups (LIG).

The ministry has been pushing for promoting affordable housing by streamlining guidelines on public-private partnership. According to latest estimates, housing shortage stands at around 27 million units, and at least half of that are for people who cannot afford to own a house. The ministry hopes that once the approval time is cut, developers and builders will pass on the reduced cost in construction of houses to consumers.

Moreover, poor home sales in the past few months, the inventory overhang of unsold units, high interest rates and a slowing economy have hit the realty markets of the National Capital Region (NCR), the Mumbai Metropolitan Region (MMR) and Bangalore, as the three metro markets reported a sharp fall in sales in the January-March period, according to Gurgaon-based real estate research firm PropEquity.

The ministry expects suggestions from developers and public about type of reforms for streamlining project approval process for real estate projects without interfering or jeopardizing the existing development control norms.

Realty experts say, now around 70 approvals are needed for a housing project, and the entire process takes between two and three years. Housing Minister Kumari Selja has said that the government was looking at a single-window clearance for building houses.

There is realization in the ministry that the target of affordable housing cannot be met without supporting private players and forging viable partnerships among the Centre, state governments and urban local bodies.