A luxury few people can afford

At the prevailing price of, say, Rs. 5 lakh, the opportunity cost of the purchase of a flat is about Rs. 6,000 per month.  If a loan were to be taken, say from the Housing Development Finance Corporation (HDFC) to make the purchase, the monthly installment (15-year repayment) would be about Rs. 7,000 per month.  Taking into account other minimum family expenses, such a family would need to have a monthly post-tax income of say Rs.9, 000 per month.  This would require a pre-tax annual income of Rs.1,60,000.
 
One wonders how many people can really afford such a ‘luxury’.  The average annual income in the organized private and public sector is only Rs.30, 000.  Even assuming that the family has two bread-winners, the combined income would be less than half of what is needed to purchase such a flat.  Real Estate in Kerala is now becoming increasingly costly for the common people and only those who have successful businesses can now afford to purchase land in the main urban centers.
 
The National Commission on Urbanization has intimated that only seven per cent of households earn more than Rs.3000 per month, and therefore have an affordable capital in excess of Rs. One lakh.  Since the high density, high-rise structures constructed by private builders are priced well over Rs. 5 – 10 lakh, only seven percent of the households have access to such housing.  This means that 93 percent of the households in the city areas of Kerala are deprived of access to prime land or even reasonably well located land and hence they are compelled to move to such locations that may have less infrastructural facilities.
 
The migration of people from the key city centers is not at all a new phenomenon.  With the increasing congestion, people yearn for the simple relaxed lifestyles in the rural areas.  But the truth is that even those rural areas of Kerala are now getting urbanized at a fast pace.