Flat costs then and now

Under the new pattern of housing scheme in Kerala launched in the year 1979, the present disposal cost of flats is; Middle Income Group (MIG) category Rs.1.75 lakh to Rs. 2 lakh.  Lower Income Group (LIG) one lakh to Rs.1.25 lakh and Janata Category Rs.60,000 to Rs.70,000.  The tentative price of such flats in 1979 was 42,000 in MIG category, Rs.18,000 in LIG category and Rs.8000 in Janata Category.
 
With the continuing increase in the price of land and the rising costs involved in the development of infrastructure such as roads, water supply, drainage, streetlights and power supply, the patterns of development are bound to change.  In the million plus cities, for example in Delhi, the market value of a small two-bed room flat in a colony, is not less than Rs. five lakh.  Its cost of construction at current prices may be Rs. two lakh and the rest of the price is the premium on land.  If the premium price on land is less, then the price of such a flat could be, say Rs.2.75 lakh, a more affordable figure for the middle class.
 
An Apartment in Kochi now costs several times the cost a similar living space sold just a few decades ago.  The land value has appreciated and along with that many of the other input costs have also gone over roof and hence the phenomenal increase in the value of the final product.  Land prices are unlikely to reach the limits seen in earlier times due to a host of factors.
 
The Indian economy has matured and is now the cynosure of investors from all parts of the globe.  In Kerala, Kochi city is the main recipient of investments into both industrial development and also real estate.  Perhaps in no other city in the city can you see similar developments.  Thus the cost of an apartment is hovering at a higher level mainly due to a host of different factors.  When demand increased and supply decreased, it also helped to a steep increase in the cost of the final product.