Owning a home in India has become a distant dream for many middle-class families. Despite a growing economy, real estate prices continue to skyrocket. But why? While factors like population growth and urbanization play a role, corruption remains the biggest culprit behind India’s unaffordable housing crisis.
Believe it or not, land in India is often more expensive than in the USA, where incomes are significantly higher. So, what’s driving these outrageous property prices? Let’s break it down.
1. The Land Mafia and Political Nexus
Buying land in India isn’t as simple as making a deal. Land mafias—a group of powerful real estate dealers backed by politicians—control large chunks of land, driving up prices artificially. These groups:
- Acquire land at dirt-cheap rates from farmers and the government.
- Hold onto it for years, waiting for prices to rise.
- Sell it at 10 to 50 times the original price, making huge profits.
The worst part? Government officials and politicians are often complicit in these deals. They tweak zoning laws, change land-use permissions, and ensure their allies profit while the common man suffers.
Comparison With the USA
In contrast, the USA has strict regulations on land hoarding. The government taxes unused land heavily, discouraging speculative hoarding. But in India, landowners pay almost zero tax, allowing them to hold onto land indefinitely.
2. Sky-High Construction Costs – Thanks to Corruption
Even if you manage to buy land, building a home is another nightmare. India’s construction industry is riddled with bribery at every level. From getting approvals to laying the first brick, builders must grease multiple palms.
- Bribes for approvals: Builders pay officials to get environmental and zoning clearances.
- Overpriced raw materials: Cement, steel, and bricks are costlier due to cartels controlling the market.
- Fake delays: Developers intentionally delay projects to push prices higher, forcing desperate buyers to pay more.
Result? Apartments that should cost ₹40 lakh are sold at ₹1 crore.
USA vs. India
In the USA, strict laws prevent cartels from forming, and project approvals are transparent. India, however, has a bureaucratic black hole where corruption thrives.
3. Government Policies That Hurt Homebuyers
Ironically, policies meant to help homebuyers often do the opposite.
- RERA (Real Estate Regulatory Authority): Launched in 2016, RERA was supposed to protect buyers. But loopholes allow corrupt builders to bypass it. Many projects still face delays, cost overruns, and outright fraud.
- GST on Real Estate: India imposes 5% GST on under-construction properties, making homes costlier. In contrast, in countries like Singapore, housing projects for residents enjoy zero GST to keep prices low.
Wouldn’t it be nice if the Indian government learned from these global models?
4. Black Money in Real Estate – The Silent Killer
Ever wondered why cash transactions still dominate real estate? That’s because the Indian property market is a safe haven for black money.
- Fake undervaluation: Properties are undervalued on paper to avoid taxes.
- Huge cash transactions: Many builders accept 30-40% in cash, keeping black money in circulation.
- Politicians’ real estate investments: Many politicians own multiple properties, using real estate as a safe investment to launder money.
In comparison, the USA strictly regulates property transactions, ensuring 100% transparency.
5. The Middle-Class Struggle: Renting vs. Buying
With property prices touching the sky, most young Indians prefer renting over buying. The rent-to-price ratio in Indian cities is extremely low—meaning it takes 25-30 years of rent to equal the cost of buying a home. In the USA, the same happens in 15-20 years.
A ₹1 crore home in Mumbai often rents for just ₹30,000 per month. Wouldn’t it be smarter to invest elsewhere?
Solutions: How India Can Fix Its Housing Crisis
It’s not all bad news—there are ways to make Indian real estate more affordable:
- Strict Anti-Land Hoarding Laws – Heavy taxation on unused land can stop speculation.
- Transparency in Approvals – Digital platforms should replace paper-based permits, reducing bribery.
- Crackdown on Black Money – Linking all property transactions to Aadhaar and PAN cards can curb illegal deals.
- Promoting Affordable Housing – Governments should offer subsidies and tax breaks to genuine homebuyers.
- Lowering GST on Housing – Removing GST on under-construction homes can reduce costs instantly.
Final Thoughts: Is Home Ownership Still a Dream?
For millions of Indians, owning a home is still a distant dream—thanks to corruption, policy failures, and black money. Unless serious reforms happen, the real estate bubble will continue to price out middle-class buyers.
The question is, will the government step up, or will India’s housing crisis get worse? Time will tell.
