House Prices in India are at an All-Time High, with Affordable Units Getting No Relief.

According to the latest report from London-based Lloyds TSB International Global Housing Market Review, housing prices in India are the highest in the world. After inflation, prices in a country with a population of 1.21 billion people have risen by 284 percent since 2001. This translates to a 14 percent annual rise. Sale in Qatar | Property Hunter

According to the Lloyds survey, Russia and South Africa have the second and third highest housing prices, respectively. Prices in Russia have increased by 209% in the last ten years, while they have increased by 161% in South Africa.

Shelter prices in Japan, on the other hand, fell by 30% during the time span under consideration. In Germany, they were down 17 percent. According to the survey, prices in the United States have fallen by 2% in the last ten years.

The United Kingdom remains among the top 15 performing markets. Over the last decade, housing prices have only increased by 50%.

According to the Lloyds survey, prices in India increased by 9% last year.

The lack of inexpensive banking credit for developers, increased debt servicing levels, and a decreasing rate of foreign direct investment, according to banking and financial analysts in India, is a recurrent problem in trying to build affordable housing.

According to published studies, India's real estate sector contributed just 5% of the country's total GDP this year, down from 10.6% in FY 2010-11.

The country's budget for 2012 was largely unsatisfactory to developers. They had hoped for more provisions in the budget to encourage the construction of affordable housing. Several primary budget items, however, were aimed at boosting resources for new residential developments.

External Commercial Borrowing ('ECB') doors, for example, are proposed to be opened for specific low-cost affordable housing programs, which could theoretically provide the housing sector with much-needed liquidity.

Furthermore, from July 2012 to June 2015, the interest rate on ECB loans available from July 2012 to June 2015 will be reduced to 5% from the current rate of 20%.

The budget also provides a bonus for real estate-focused Venture Capital Funds ('VCF'). The VCF that invests in real estate will not be taxed, and the tax will be imposed at the level of the investor.

This amendment eliminates the long-standing debate over trust taxes. It is also expected to reduce the number of real estate-related lawsuits.

One of the big budget initiatives that could have a significant cash-flow effect on the real estate market, according to Indian analysts, is the deduction of a 1% tax on the purchase of some land parcels in urban areas. The proposal would also aid in the completion of transactions in which the buyer and seller have agreed to make installment payments.

While many in India's real estate industry had hoped for a strong regulatory and policy framework that would help improve the sector, many financial analysts believe the Union Budget 2012 falls short of expectations.

According to many analysts, the real estate sector may see a surge in operation this year from an otherwise sluggish growth trend due to the expected increase in liquidity through the availability of ECBs and the availability of higher deductions for the production of affordable housing in general.

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