Mumbai: Warning that a nexus between builders and politicians was behind high real estate prices, HDFC Chairman Deepak Parekh Monday asked the government to break it and make it easier for the common man to buy a home.
"I think scarcity creates more value and scarcity keeps prices up and there is nexus between developers, builders and politicians. The number of approvals that are needed if you have the land and you want to build on your own, it will be nightmare to get these.
"You will not be able to do it. It is so complex. It is so difficult. So it is this vested interest of this nexus which brings small parts of land in market so that the prices of land do not collapse," Parkeh said in an interview.
Asked about the remedy, he said: "Just that the nexus between politicians and builders should be removed. You see (to that) that urban authorities, Urban Development Ministry are transparent and in independent hands."
On which political figure is suited to take charge of such an exercise, he said there were many and their mission should be to increase housing stock and reduced prices.
"Make it easier to build. Increase construction. See if you (can) increase supply, it`s a question of supply and demand. Supply goes up, demand comes down. If supply of land increases, prices come down," he said.
Terming as "totally unrealistic, the latest land deal for sale of six acres of land in Vadala in Mumbai for Rs 4,000 crore, Parekh said: "It is totally overpriced. It is foolish."
Real estate prices in India peaked in 2007 at the height of the property boom, but the 2008 global financial crisis brought about some correction.
However, prices have begun to climb once again with revival in demand and availability of cheap credit.
Parekh, who heads India`s largest housing finance institution, also hit out at the developers plans to construct 90 to 100 stories apartment complexes, saying it was not clear how many years it would take to build such buildings and how the amenities like water and power as also safety measures would be taken care of.
He criticised the authorities in Mumbai for not taking a holistic view of the housing problem and wondered why the island (Mumbai) was not connected to the mainland, why trans-harbour lines were not being executed and why there was little action on related issues.
"You have highway-bridge or tunnel and see the real asset prices in Mumbai will come down," he said emphatically.
PTI
