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99% Mumbai households can't afford to buy a flat

According to the report by CII-Jones Lang Lasalle report on the real estate, only 1% of the households earn enough income, an average of Rs10,21,825 a year, to buy a home in the city at the prevalent prices.

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Around 60% of the city households earn less than Rs80,000 annually, and the income of 19% of those at the bottom of the pyramid is so low that they cannot afford to buy a house. This was revealed by a CII-Jones Lang Lasalle report on the real estate sector, which was released on Thursday.

According to the report, only 1% of the households earn enough income — an average of Rs10,21,825 a year — to buy a home in the city at the prevalent prices.

With land prices escalating and other factors, such as input costs, further jacking up real estate prices, the situation seems to only get worse for an average homebuyer. “Unaffordable land prices have resulted in leapfrogging of residential development to the suburbs of suburbs or exurbs,” said Anuj Puri, chairman and country head, Jones Lang Lasalle. This means affordable homes in far-flung suburbs, such as Kalyan-Dombivli and Mira Road-Vasai, that come with a Rs40-lakh price tag, are unaffordable.

The report also found that 15% of the households fall in the higher middle income group, earning an average annual income of Rs3,09,950. This segment generated a bulk of the demand in the high volume residential real estate market on the outskirts of the city.

“A large chunk of the demand is for homes priced in the Rs2,000-4,000 per sq ft bracket costing between Rs25 lakh and Rs40 lakh. At this price, the customer not only wants a good quality home, but also all lifestyle amenities. The challenge for the real estate fraternity is to fulfil the needs of this segment,” said Adi Godrej, chairman of the Godrej Group, who unveiled the report along with Ajay Piramal, chairman of Piramal Group.

The city’s working class is worse off than its counterparts in other metros, vis-a-vis the distance from workplace and the hours of commuting, the report revealed.

While residents of the lowest-priced locations in other cities, such as Kolkata, Pune, Hyderabad and even Chennai, travel less than 10 km to get to work, less privileged Mumbaikars travel more than 100 km to get to their workplace and back home every day.
Niranjan Hiranandani of the Hiranandani Group feels that the very concept of affordable housing in a misnomer. “Affordable housing is a lie propagated by politicians and we — developers and homebuyers — are fooling ourselves by buying into this concept,” said Hiranandani.

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