Affordable housing
India is a country with wide housing disparity and minimizing this gap has been the key agenda of successive governments since independence. The housing market in the country is characterized by an excessive demand for affordable housing. The policy push in the sector in the form of legislation such as the RERA (Real Estate Regulatory Authority), the introduction of REITs (Real Estate Investment Trusts), and housing schemes such as PMAY (Pradhan-Mantri Awas Yojana) and SWAMIH (Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects) helped improve the situation.In recent years, the segment may be transforming into a lucrative business model. Financiers and investors are increasingly entering the segment to bridge the existing gap between huge demand and supply. The involvement of private developers in affordable housing spiked after the segment was granted the status of infrastructure, enabling them to get at loans preferential rates, which in turn translated into savings for buyers. On the consumer side, multiple housing finance banks and NBFCs have been offering loans to a wide range of customers looking for home ownership.
What’s next after the pandemic property boom?
The upper strata of the workforce, mainly employed in the IT, BFSI, or formal industries performed well during the pandemic. With limited spending during the time, they managed to accumulate savings to be able to afford homes for end use. There was also a slight shift towards larger spaces to accommodate work-from-home and hybrid model lifestyles. Moreover, millennials are increasingly opting to buy residential property as a form of financial investment as compared to previous generations.However, the housing market is set to feel the impact of the Reserve Bank of India’s efforts to tame inflation. The repo rate hike and the rise in key interest might impact house sale volumes. Usually an increase in home loan rates translates into longer repayment tenure that may affect the consumer sentiment. If the slow global growth, high fuel prices, and inflationary pressures will dampen the recovery momentum of the Indian residential real estate, especially the affordable housing segment, is yet to be seen.
