Abstract
India suffers from a chronic shortage of housing, estimated at 18.8 million units in 2012, mainly in urban areas as per the Government of India. The shortage was mainly on account of congestion (15 million) followed by obsolescence (2 million) and homelessness (1 million). This paper documents the characteristic and business practices prevailing in the Indian housing sector in comparison with US and Spanish housing sectors. The paper discusses the determinants of house prices, role of lending institutions and their policies, drivers of credit flow, credit sources, interest rate regimes, regulators and housing indices of Indian housing market with brief outline about the same for US and Spanish housing market. It also includes a comparative study of housing market parameters across these three countries. The findings suggest India has experienced rise in demand for housing since 2001, owing to increase in levels of income, younger earning age group, rapid urbanisation and nuclearisation of families. It also points towards existing incomplete information in Indian housing market in terms of lack of data base about mortgages, transparency in transactions, proper laws and robust indices. The government, and major regulatory institutions, NHB and RBI, are taking care to address these issues but substantial gaps continue to prevail in the housing sector. The study concludes that there is need to undertake extensive research, mainly at the state level, revisit the methodology of calculating shortage, build database on housing sector, examine the utilization of land in urban areas, and consider importing of housing material to meet housing shortage, preferably from countries like Spain and the US where housing markets are sluggish.
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