By Dr. Anil Jindal,Chairman SRS GROUP
By Dr. Anil Jindal,Chairman SRS GROUP
The present market dynamics have made way for bringing about resurgence in the Indian real estate sector, bolstered by government-based initiatives and infiltration of global players into local market. Pragmatic retail and commercial spaces which are supplement the actual market demands are now materializing into reality. Yet, the winds in the air state otherwise. A word of decline is murmuring around the halls of real estate, with an eminent slowdown being on cards. Now, how much of that is true?
While a major lot of the housing companies and developers have been in a mood of complaint, numbers seem to suggest otherwise. According to the National Housing Bank (NHB) data for 2016-17, expense of home loans of less than Rs 25 lakh in value – majorly utilized used for buying affordable housing units and holding accountability for the bulk of the number of home loans disbursed – grew at a healthy rate of 33 per cent over a year earlier.
However, there was a decline of one per cent in the number of home loan disbursements of over Rs 25 lakh in value. One can call it a slowdown of sorts, yet this segment accounts for less than a fourth of the total number of home loans disbursed, making it a dent of negligible percentage. Notably, the share of loans of more than Rs 25 lakh, disbursed for home loans came down to 24 per cent from 30 per cent the previous year. This holds solid and glaring that in 2016-17 a higher number of people preferred to seek loans of smaller denomination, in comparison with 2015-16. Also, despite a decline in the number, the total number of loan disbursements during the year grew 23 per cent.
A new interesting change in loan disbursement trends in 2016-17: a massive hike of 48 per cent in the number of loans of up to Rs 2 lakh – which can be credited to the current government’s push on affordable housing and ‘Housing for all by 2022’. Real estate companies seem to agree with the trend, with a record of upside in residential houses priced below Rs 1 crore.
A prolific improvement has been seen amongst buyers- they are ready to invest in affordability and are not into speculations. Yet, when it comes to high-housing, the demand has been significantly less than past years. A high demand for houses priced under Rs 50 lakh is being noted, but there are very few takers for homes worth over Rs 1 crore. The reason behind the clamour around “real estate slowdown” is due to units in the affected segment – homes with price tags of Rs 1 crore or more – are mostly in large cities, which attract a lot of attention.
With the decline in contention for upscale housing, developers are crying foul as they now have to shift their attention to more affordable housing- just the vision that our Hon’ble prime minister had in mind.
Conclusion
As RERA, REIT and GST are gearing up to set in, the Real Estate sector is gaining maturity, and over the next decade we will note increasing transparency and dependability via the introduction of the above sector regulators, professionalism and international best practices in real estate, stabilizing the earlier shaky system.