Chennai house rent and sale price is hiked from 50% to 100% in the last 10 years. (2004 to 2014) Especially in south madras (Chennai).
India holding the largest middle class population in the world. But its metro cities seem to be not suitable for middle class dwelling. Cost of living in metro cities especially like IT hubs like Bangalore, Hyderabad, and Chennai are going beyond the purchasing power of middle class people. Chennai is slowly pushing the middle class people to out skirts of Chennai. You may be eliminated from Chennai anytime.
In western countries, particularly in American metros, more than 50% of the earning should go towards house rent. Now Chennai is racing with American cities in hiking house rent. Ultimately and as usual middle class people is going to suffer like any thing. They have to seek house in out of Chennai. Either low class or high class alone is going to live in Chennai.
Why this hike? Is there any way things will revert back to normal? After discussing with friends, Real Estate brokers, House owners, and investment consultants I like to figure out few issues.
First I would like to discuss about Housing Loans. Housing loans are thriving to professional especially to IT and medical professionals. Huge loan amount with 40% to 60% of the salary as to EMI for two decades is one of the reasons for hike in house selling price and house rent. If you purchase a house and paying EMI as 60% out of your salary then you will definitely increase your rent to meet out your EMI. EMI is an ‘indirect tax’ you pay to financial institution. Many people avail housing loan because; EMI is tax detectable source (TDS). When Government change EMI paid for housing loan like it is not a Tax Detectable Source (TDS), then house price and rent will be increased further.
Next is IT Boom and outsourcing success. Western and European money (currency) coming to India through software outsourcing. Most of the companies sky scrapping salary to its employees. They have more purchasing power than others. Because of this sectors House rent and price are increased. Moreover, 70% of IT employees are youngsters and not married. They do not have big family commitments. They form a group of 4 to 5, occupy a house and share the rent. Their monthly total income of the group will reach 2 to 3 lakhs(INR). For them rent is not a big issue. Since they are going to share rent, which is not an issue what ever it may be. This group’s paying power is more than a single man earning family. Single man earning family can not afford or what group of bachelors can afford. House owners are increasing the rent because of this high earning cum low committed group of bachelors. These bachelors will suffer by the house rent when they raise their independent family.
These IT boom and housing loan are main reasons for sky scrapping house rent. Soon Chennai may be a city of high earning youngsters (bachelors).
What about single man or couple earning families, especially those who are working in other than IT and medical sectors.
Government is not interfering into Rental boom like in English medium schools and college fee boom. Many house owners are not giving proper bill or receipt for the rent. At least Government should enforce the house owners to pay proper tax for the sky scrapping rental they demand.
Western currency especially American dollar coming to India through IT out sourcing is ultimately and indirectly going to financial institutions both Government and Private, and House owners of Indian metros and Real Estate industry. They will be prospering in the next decades more than other sector people.
Is there any way to bring back to normal or middle class comfort or at least stop it where it is now? Government should introduce a Rent ceiling act to regulate rent. It should collect the tax against the rent originally received.
If nothing happening to stop the sky scrapping rentals, then middle class will suffer like anything. Man kills another man. Civilization kills another civilization. Religion kills another religion. Caste kills another caste. Race kills another race. Now class kills another class: High class will kill middle class. There will be no class barrier after getting rid of other classes and keeping only one alive.
If you belong to middle class or middle income group, you may be eliminated from Chennai or Indian metro cities any time. Even the sky scrapping software salary is smaller than sky scrapping rentals.
Men from India leave their families in their villages or rural head quarters and go to Gulf countries and East Asian countries for earnings. Like that, Men have to come to Chennai or metro cities for earnings without their families.