The Indian real estate sector has been an important growth driver for our economy for the last two decades. With the increasing spending capacity of the individuals in the Tier 1 cities, the wave of ultra- luxury housing came in the market. Gradually, the shift of the industry started drifting towards Tier 2 and Tier 3 cities. Our Prime Minister has always laid stress on the fact that our government wants every Indian to have a house by 2022! The housing schemes aim to provide housing to the poorest of the poor. As per the latest statistics, keeping in mind the key parameters like growing population, young demographic profile, shift towards nuclear families and rapid urbanisation; the affordable homes segment is poised to hit the Rs 6.25 lakh crore mark by 2022.
Last year, a lot of realtors had raised the issue that the ‘Affordable housing’ is actually not affordable. The reason was that there was a very limited supply of low cost and affordable homes, and those too came only from the small scale and unorganised developers. We were trying to be innovative while still leveraging local skills, trades, materials, and techniques. Above all, the cost of construction was not only the dominant factor in housing affordability. It is a complex interaction of market forces, government policies, and demographic trends, etc. While the Budget of 2016 tried to push developers to redeploy the money into building more affordable housing, to bring in greater supply and spur construction activity, but not everybody promoted it.
As on date, the market has become end-user driven and currently everyone is looking for home, whose prices affordable. Now even the top developers have aligned their vision with the Prime Minister’s vision. Keeping hopes high from the Budget 2017, the buyer expects strategic planning and decision making in factor of making affordable housing a reality. The recent introduction of the interest subvention of 3% and 4% on home loans of up to Rs 9 lakh and Rs 12 lakh, respectively, under the Pradhan Mantri Awas Yojna is one such example of the same.
Affordable Housing has a low initial capital requirement for the project development. This, along with strict timelines for timely execution will add to the developer’s ability to execute the project within the budgeted cost and time. The impact of the Budget on the infrastructure sector and measures to promote the low-cost housing is the common man’s expectation from the Budget 2017. Once the initial development cost is cut down, the developers will have enough reasons to invest into building affordable homes and also attract buyers and investors.
Industry experts in their views at various forms have shared that, “While it may appear to be a small change, categorising low-cost housing as infrastructure could have far-reaching results.” The upcoming budget is expected to bring with it many more relaxations to the common man, whose dream of owning a ‘home’ is about to become a reality!