Faulty land policies are preventing development of affordable houses in urban areas, which are likely to witness huge demand for residential premises in the times to come, HDFC Chairman Deepak Parekh said today.
"In India land policies have created distortions that have led to inordinate high prices in many key metro cities, Parekh said while addressing a National Housing Bank (NHB) Conference here.
"In places like Bombay (Mumbai) and Delhi and some large metros, land constitutes 90 per cent of the cost of the house.
If 90 per cent is the value of land, obviously it signifies we have wrong faulty land policies and with those land policies you cannot have a solution for affordable housing," he said.
According to reports, the demand for affordable houses has not been met due to various reasons including inadequate supply of houses as well as absence of credible builders in this field.
Parekh said there is no standard definition for affordable housing, but land prices need to be lowered to built low cost houses.
"This is the most challenging aspect. While there can never be a standard definition of what is affordable housing, the bottom line is land prices need to be reasonable for affordable housing to come into supply," he said.
As per estimates, only 30 per cent of Indian population live in urban area and this is going to go up to 40 per cent in the next decade.
"With urbanisation increasing so rapidly, it is essential to bring more land under urban usage. High land prices result in housing being out of the reach of middle class families.
Recently real estate prices in some parts of the country have become fairly unrealistic. This has led to more buyers holding on," Parekh added.