Excess supply but prices keep rising. Indian magic?

We know that real estate prices in India are very high but we had not idea of the humongous price bubble hanging over the real estate market. Seems that the number of households in India have risen from 187 million in 2001 to 247 million in 2011 while the number of houses has gone up from 250 million in 2001 to 331 million in 2011, which means that houses outnumber households by 84 million. Surely if there is such an oversupply prices should have dropped? But prices continue to rise and property dealers are hoping that policies of the BJP government will push prices even higher. Property prices were rising so fast under the Congress as a hedge against very high inflation rate, because the RBI was forced to keep interest rate low, giving negative returns to savers, and trillions of rupees in black money from various scams could only be safely invested in real estate. The Prime Minister wants every family in India to own a house by 2022 which will need 20 million units in urban areas and 45 million in rural areas. Is it feasible? If the population keeps increasing we will always be chasing a deficit of housing and if land is used up for construction there will be less land for agriculture. Affordable housing can only be built where land prices are still relatively cheap but will people want to live far away from their place of work, adding to the time and cost of commuting? The price of land in rural Andhra, 100 km from the nearest town, has risen from Rs 20,000 an acre in 2003 to Rs 1.2 million per acre in 2012. More than 50% of our richest individuals have investments in real estate, the highest rate in the world, and a whopping 87% of them want to buy more properties. Savings in financial instruments in India has dropped from 38.1% of GDP in 2008 to 30.1% in 2012-13 while the savings rate in Singapore is 48% of GDP and even higher in China. Increasing taxes on mutual funds, as our finance minister has done, is hardly going to encourage Indians to rush to buy them. Constantly rising prices mean that the those without any property have no hope of owning one while millions of units lie vacant because the owners are reluctant to rent them out due to our restrictive rent control laws. Thus there is an artificial shortage of housing for rent, while in parts of Delhi landlords have added 2 or 3 extra floors to their houses, without proper foundations, to rent them out to students or migrant workers. Delhi is an earthquake zone so we wait for a catastrophe. Real estate prices need to decrease by over 50% to reflect fair value. But if prices collapse will it help the economy or cause a fall in the rate of growth? Politicians must be terrified of the unknown. Those of us without black money watch with interest.