What Makes India's Real Estate So Expensive?

2) Demand overshoots supply:

The residential sector has been flourishing over the past few years by attracting buyers, which has led to spiraling demand in the real estate sector. Despite volatile economic condition, the demand for residential has grown exponentially and majority of people are opting to buy houses, resulting in escalated demand. This increasing demand has resulted in unreasonable prices in real estate, especially in residential sector. Though the demand is high yet India is still falling short of millions of homes and leveraging on this fact are developers who tag their projects with high prices to meet demand. The demand for housing overshoots supply and therefore developers are coming up with their projects in suburbs and also along expressways.

For instance, during the second quarter of this financial year, Bangalore city has seen the absorption rate of 4290 residential units compared to 4182 residential units in the first quarter, which has pushed the absorption rate upbeat from 11 to 12 percent, according to a periodical market update by Jones Lang LaSalle, reports Times Property.