New Delhi: Property prices in India shoot up by 40 percent due to delays in starting of projects, which require 34 procedures to get clearance, taking an average of over six months time and the issue needs to be addressed, according to the Economic Survey.
"India's housing and real estate sector faces many challenges. There are 34 procedures and the average time taken is 196 days, which increases the sale value by 40 percent," the Economic Survey for 2012-13, tabled in Parliament on Wednesday, said.
Citing the latest report by the World Bank, the survey said India is among the top countries in terms of housing and workspace needs, but it ranks 182nd in construction permission processes.
"Rapid increase in land prices, absence of a long-term funding and lending market at fixed rates, limited developer finance, the Urban Land Ceiling Regulations Act (ULCRA) continuing in some states, existing lower floor area ratio in cities, high stamp duties and difficulties in land acquisition are some other issues, which need to be addressed," it said.
Real estate and the housing sector have a share of 5.9 percent in India's GDP and witnessed a growth of 7.2 percent in 2011-12. The growth of the realty services has been impressive consistently at over 25 percent since 2005-06 with 26.3 percent rise in 2011-12.
The survey also pointed out that property prices have moderated during the current financial year.
"As per the National Housing Bank RESIDEX index for the quarter July-September 2012 compared to April-June 2012 (covering 20 cities, with 2007 as base year), there is a general decline in prices of residential properties in some smaller towns, while the increase in other cities is mostly marginal," it added.
In view of increased urbanisation, the housing demand in cities has been witnessing increases over the years.
As per the estimation of the Task Force on Housing Requirements in urban areas during the Twelfth Five Year Plan Period (2012-17), the shortage of dwelling units is 18.7 million units, of which 18.5 million are for the economically weaker sections and lower income groups.