Why traditional economic models fail to explain India's property market

I’ve been thinking about how the housing market in India works. It’s weird because it doesn’t follow the usual rules of supply and demand that we learn about in school.

Here’s what I’ve noticed:

  1. There are lots of empty houses, but prices are still high. It’s like people are keeping houses off the market on purpose.

  2. It’s super hard to build new homes because of all the rules and red tape. This makes everything more expensive.

  3. I’ve heard rumors about people paying bribes to get things done faster. This probably adds to the cost too.

  4. Some folks use houses to hide money they don’t want anyone to know about. This messes up the prices even more.

  5. A lot of people buy houses just to make money, not to live in. They sit on them for ages, waiting for prices to go up.

  6. The market never seems to crash, so people think it’s safe to hold onto houses for a long time.

What do you guys think? Is this why houses cost so much in India? Or am I missing something?

Interesting observations! Have you considered the role of cultural factors? In India, owning property is often seen as a status symbol and investment for future generations. How do you think this mindset impacts the market dynamics? It’d be fascinating to explore how these cultural norms interact with economic principles.

ur right, the indian property market is wild. i’ve seen ppl sittin on empty flats for years, hopin prices’ll skyrocket. its crazy how much red tape there is too, makes buildin new stuff a nightmare. maybe thats why prices stay high even tho theres empty places everywhere? its def not like what we learned in econ class lol

You’ve highlighted some crucial points about India’s property market complexities. The disconnect between supply and demand is indeed perplexing. One factor to consider is the rapid urbanization and population growth in major cities, creating sustained demand despite existing inventory. Additionally, the lack of a robust rental market and limited alternative investment options push more people towards property ownership. The regulatory environment, while intended to protect buyers, often adds layers of complexity and cost. These factors, combined with speculative investing and the use of real estate for wealth storage, create a unique market ecosystem that defies traditional economic models. It’s a multifaceted issue that requires a nuanced understanding of local dynamics.