Readers Say

With reference to the article, “What drives property prices,” property prices are high because most of the black money is invested in real estate. Property prices have gone beyond the purchasing power of the middle class. Look at the inventory levels in big cities — they are extremely high. No one lives in most of these apartments.

In any other business, prices would have fallen to a level where liquidation of these inventories would have allowed the working capital to recycle in the system. Since the sources of black money are perennial and the owners have no compelling reasons to cash out the return (where else will they invest this cash?), real estate prices keep rising. Such bubbles would have burst in most markets but the real estate bubble in India is made of black money, so it will not burst. It will just make finding housing more difficult for the people.

I have the following reasons for not buying property: Prices are much higher compared with what you pay in developed countries; if you could buy there. Even in places such as Dubai, which has got excellent infrastructure, the cost of real estate is much cheaper than my place (Chennai). At least in Chennai — I think the same holds good for most other cities — there is absolutely no infrastructure and amenities to support such a huge growth in high-rise buildings. It may come in future but it will take another 10 to 15 years.

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