Dr Manish Gupte is an economist with a Ph.D. from Purdue University. He is actively involved in inter-disciplinary research. Amongst other things, he is studying market manipulation in Pune Housing Market. The results are an eye-opener!

Analysis of supply and demand in markets shows that if supply is less, the prices are high. Also, many times, suppliers gang up/collude and together reduce supply. It increases prices and gives suppliers high returns. This type of ganging up is illegal, and the Competition Commission of India can look into such matters regarding the Indian market. There are Competition Commissions in the US and Europe, and there are Courts also which deal with such anti-competitive behavior.

Making profits is not wrong, but suppliers ganging up and not allowing competition to make things affordable is illegal and leads to inefficient allocation of resources. Capitalism and markets work because buyers get the benefit due to competition between sellers.

Dr Manish Gupte Analysis

Now, let us focus on the Pune Housing Market. Dr Manish Gupte analyzed Pune RERA housing market data and considered the set with a completion date within a month or past. There are 63 properties in the Municipal area with one BHK or 2 BHK apartments and meet this completion date criterion.

In this set, 15 projects have sold only 50% or less 1BHK and 32 less than 50% 2BHK. You can easily find builder names from RERA data, and we should find out if they have done this type of market manipulation earlier. This analysis provides evidence that builders are not selling flats to increase prices.

After this, Dr Manish Gupte looked at how much work is complete in these construction projects. For all residential housing projects with completion dates within a month or past, the overall completion of work is shocking. Average completion is 71%, and median completion is 78%. 16% of properties are less than 50% complete. See chart. It is clear builders are delaying completion to control supply. Builders may also be giving misleading dates to entice buyers.

Dr Manish Gupte – Exposing the Builder Lobby in Pune

Dr Manish Gupte’s first-hand experience shows few builders are leading this kind of market manipulation. Manish is building advanced econometric models to analyze the market better. The Central and State Governments have to look into this market manipulation. Builders who manipulate markets regularly have to be exposed and penalized.

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