The invisible buyers

A friend recently shared a viral social media thread about housing prices in Gurgaon that struck a nerve across urban India. The author described someone earning twenty lakh rupees annually – placing him in the top five per cent of Indian earners – yet unable to afford even the most basic flat in his city. Every project starts at two and a half crores, complete with infinity pools and Italian marble that this prospective buyer neither needs nor wants.

This isn't just a Gurgaon problem. From Mumbai's suburbs to Bangalore's periphery, the same story plays out with depressing regularity. Young professionals, couples starting families, and middle-class savers find themselves priced out of markets where they work and live. The numbers simply don't add up when you match legitimate incomes against property prices. Yet somehow, these flats sell. The obvious question follows: if people earning twenty lakhs annually can't afford them, who exactly is buying these properties?

Suggested read: Raising the risk

Of course, the answer is obvious and has been so for a long time. There's the visible market, where documented incomes meet transparent pricing, and there's the invisible market, where undeclared wealth finds its most convenient parking space.

Real estate has always served as India's favourite repository for black money, but this function has become even more critical in recent years. The digitisation of banking, universal KYC requirements, and Aadhaar linkages have made it nearly impossible to store large amounts of undeclared cash in traditional financial instruments. Bank accounts leave digital footprints. Mutual funds require PAN cards. Even gold purchases above certain amounts trigger reporting requirements.

Property transactions, however, remain refreshingly opaque. Despite numerous attempts at reform, the sector continues to accommodate cash components that would be impossible in other asset classes. This parallel economy creates a vicious cycle. Every cash transaction inflates property values artificially, making homes unaffordable for those relying solely on documented income. The person earning twenty lakhs annually isn't competing just with similar earners who just need a place to live; he's competing with enormously rich buyers who use the same flat as an untraceable deposit.

Suggested read: Demonetisation and real estate: quick impact

The distortion runs deeper than inflated prices. Developers, aware of this dual market, design projects accordingly. Those infinity pools and biometric lifts aren't added because genuine homebuyers demand them. They're included because cash-heavy buyers view property as an investment vehicle first and a residence second. The more premium the amenities, the easier it becomes to justify inflated prices that accommodate large cash components.

Meanwhile, the genuine homebuyer – the software engineer, the bank manager, the teacher with fully documented income – finds himself priced out of his city. He's told to look at tier-two cities or compromise on location, effectively subsidising the laundering activities of the invisible buyers.

This isn't merely an economic problem; it's fundamentally unfair. People who pay their taxes diligently, whose every rupee is accounted for, face inflated housing costs because they're competing in a market distorted by those who don't play by the same rules. The solution requires the same kind of systematic digitisation that has transformed other sectors of the Indian economy. Just as banking has become more transparent through Know Your Customer (KYC) and digital payments, real estate transactions require comprehensive digital oversight. Every payment, every ownership transfer, every price negotiation should leave a digital trail that can be scrutinised.

Suggested read: The KYC industry

This won't be easy. The real estate sector has powerful lobbies, and many stakeholders benefit from the current opacity. But the alternative – continuing to price out legitimate homebuyers while providing a haven for undeclared wealth – is far worse. Some will argue that such reforms could crash property values, hurting existing homeowners and also lenders who have financed property. This concern, while understandable, misses the point. Housing should be about providing shelter and building genuine wealth, not about facilitating tax evasion. If transparency reduces prices, it's because those prices were artificially inflated to begin with.

The government has shown remarkable political will in digitising various aspects of the economy over the past decade. Banking, telecommunications, and even street vendor payments have been brought under digital oversight. Real estate should be next. Young professionals earning twenty lakhs annually shouldn't find themselves unable to buy homes in their cities. When legitimate earners can't participate in housing markets, those markets have failed their primary purpose. It's time to fix this fundamental distortion through transparency and accountability.

Also read: Real estate dreams and nightmares