What is a ready reckoner rate and why you must care

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We as a nation, dream of a home for each of us. Our Government thus launched its ambitious mission “Housing for all by 2022”. Noble might be the intentions, reality shows a different picture. It has become almost impossible for a common man to buy a new home in a decent locality. Look at the housing price index published by RBI over the last 6 years, it shows the ever increasing prices of homes all over the country. The major cities have shown 3-15% rise in housing prices, making buying homes -a real dream.

The great Indian paradox:

We say we need a home. And hear about residential housing sales not picking up. The RBI has cut rates still prices of new projects are not coming down. Developers say their business is in trouble. And they won’t cut down the housing prices!
Got confused? This is the ‘REAL’ paradox I am talking about.
Let’s analyze problems with each of the segments involved:
First the demand side. A demand won’t pick up because of various factors like high priced homes (read unaffordable), dearer loans, high-interest rates, a general slowdown in job creation, delay in delivery of projects etc… These directly contribute to slowing down the demand.
Now the supply side. The developers say they have a little control over high prices. High input costs caused by huge land acquisition prices, government taxes and levies, etc. contribute to a fixed minimum basic price which is not in their control. Considering their own profits adding to this sum we get an even bigger number as the final price of the property.
To maintain their profit margins on already invested huge money, developers are in a wait and watch position hoping for the revival in demand.

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Now, as we get a clear picture of the housing drama, we understand that there is fixed the basic price of any real estate. A major portion of this price is altered by the government itself. The real estate rates are regulated by the government through a reference rate called as ready reckoner rates.

You can read the complete article here.

This article was originally published at superise. Published on our blog on the request of the writer.

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