In fact, the sharp and continuous increase in price of houses and inflationary expectations generated by these price increases make ownership housing a preferred option – whether the household intends to sell the house after a short while or continue to live in it for a long period. The
Builders in Kochi are now offering living spaces on rent and for outright sale to people with any type of income or budget. The present situation in Kochi is far different from that prevailing in Delhi, the national capital.
In Delhi (during 1971-81) the price of houses has increased at an average rate of growth of more than 12 percent per annum. In Kochi and that too in certain parts of the city the growth rate was more than 30 percent Another factor which strengthens the preference for ownership housing is the certainty related to the cost of owning and exercising control during the period of residence. There is great deal of uncertainty attached to both these variables in the case of rental housing in Delhi. The future stream of rents is unknown and the security of tenure very low.
The uncertainties related to rental housing are paradoxically a by-product of the Delhi Rent Control Act, which was imposed to ensure security of tenure and reasonable level of rent. Another side effect of this Act has been reduced availability of rental housing, which has pushed households into the ownership housing market. The supply of rental housing in the city is low not only due to the Rent Control Act (RCA) but also due to the low rate of return from renting out.
In Delhi, the (model) rate of return in private sector rental housing market was found to be as low as 2 –3 percent. The role of government or institutional sector in supply of rental housing is very limited. On the other hand, the government has played a very active role in promoting ownership housing in the city through its various housing programmes and by making housing finances available to large sections of population.
