Why YOU Can't Buy a House | Corruption in Property Market

Summary

This video delves into the challenges of purchasing property in India, highlighting Mumbai's high housing costs exemplified by a 420 sq ft flat priced at 2 crores. It attributes the issue to low Floor Space Index (FSI), which restricts building height and density, unlike in cities like Shanghai and New York. Corruption, including the use of black money and bribery, inflates property prices, making it difficult for average citizens to afford homes. The script also touches on the potential benefits of increasing FSI and the role of education in improving job prospects and salaries.

Takeaways

• 🏠 The high cost of housing in Indian cities like Mumbai and Bangalore is a significant issue for many people, with properties being priced in crores of rupees.
• 🌆 The lack of tall buildings in Indian cities compared to other metropolises like Shanghai, Hong Kong, and New York is due to a lower Floor Space Index (FSI), which restricts the amount of floor space that can be built on a given plot.
• 📈 The FSI in Mumbai is notably lower than in other global cities, limiting the amount of developable space and contributing to high property prices.
• 💼 The Indian real estate market is impacted by corruption, with bribes and black money influencing property prices and making it difficult for average citizens to afford homes.
• 💼 Black money is often used to purchase property, allowing individuals to avoid taxes and inflate property prices, which in turn affects the affordability for others.
• 💵 The process of obtaining construction permits in India is lengthy and fraught with bureaucracy, often requiring bribes at multiple stages.
• 🏢 Developers sometimes engage in practices that allow buyers to pay a portion of the property value in black money, thus reducing the tax burden and potentially increasing property prices.
• 💼 The video suggests that increasing the FSI could lead to more affordable housing and rental rates, benefiting job seekers and residents in Indian cities.
• 💼 The video also mentions that controlling corruption in the real estate industry could significantly reduce housing prices, making homes more accessible to the average Indian.
• 📈 The script highlights the importance of upskilling and securing better-paying jobs, as suggested by the promotion of Scaler.com, an online tech academy, to help individuals afford housing in India's competitive market.

Q & A

What is the approximate cost of a 420 square feet under-construction flat in Dadar West, Mumbai?

The approximate cost of the flat is INR 2 crores.

What are the three major reasons responsible for the high property prices in Indian cities?

The three major reasons are low Floor Space Index (FSI), black money, and bribery in the real estate sector.

What is the Floor Space Index (FSI) and how does it affect property prices?

FSI is the maximum amount of floor space that can be built on a given plot of land. A low FSI in Indian cities, compared to cities like Shanghai, Hong Kong, and New York, restricts the amount of floor space that can be constructed, leading to higher property prices due to limited supply and increasing demand.

How does black money impact the property market in India?

Black money is used to buy properties without paying taxes, which allows individuals to hide their unaccounted wealth and avoid tax payments. This practice can escalate housing prices for normal buyers as it distorts the market.

What is the circle rate in the context of Indian real estate, and how is it used to avoid taxes?

The circle rate is the minimum property rate for properties in a particular area. Developers and buyers may agree to pay a portion of the property price at the circle rate, which is reported to the government, while the rest is paid in black money, thus reducing the overall tax burden.

How does the process of getting construction permits in India contribute to high property prices?

The process of obtaining construction permits in India is lengthy and requires numerous approvals, often involving bribery. This adds to the cost of construction, which is then passed on to the buyers, increasing property prices.

What is the potential impact of reducing corruption in the Indian real estate sector on house prices?

Reducing corruption could lead to a significant reduction in house prices, with estimates suggesting a potential decrease of up to 50 percent of the final price of a house.

How does the video suggest increasing the FSI could benefit residents of Indian cities?

Increasing the FSI would allow for more floor space to be built on the same plot of land, potentially leading to lower rent rates and providing more space for residents, especially those moving to big cities for job opportunities.

What role does Scaler Academy play in helping individuals secure better jobs in the tech industry?

Scaler Academy is an online tech academy that offers mentorship and training by experts from top tech companies, focusing on upskilling college students and tech professionals to become high-quality software engineers and data scientists. This can lead to better job opportunities and higher salaries.

What is the significance of the story about Suraj Parmar, the real estate developer from Thane?

The story of Suraj Parmar highlights the challenges and pressures faced by developers in the Indian real estate industry, including threats and demands for bribes from local officials and politicians, which can contribute to the high costs of properties.

How does the video suggest that the Indian property market is affecting the common man's ability to buy houses?

The video suggests that the high property prices, driven by factors like low FSI, black money, and corruption, make it extremely difficult for the common man to afford houses in Indian cities, leading to a significant burden on potential homebuyers.