Realtors must focus on affordable housing: NHB

Written by Arun S | Kakoly Chatterjee | New Delhi | Updated: Dec 9 2008, 05:54am hrs
The chief of the National Housing Bank, in charge of providing a Rs 4,000 crore refinance window for financing homes worth up to Rs 20 lakh, has said that its time for the real estate industry to look at setting up affordable projects in metros, Tier-I and Tier-II cities.

There are fiscal, demand and supply issues in the realty sector. The most important issue now is the supply factor. It is impossible to get a one BHK apartment in Delhi due to the supply problem. The realty companies just do not construct, NHB chief S Sridhar told FE , indicating that it is virtually impossible for the middle or lower middle class to get an affordable roof over the heads in metros and upcoming cities.

Urban development minister Jaipal Reddy has been stressing upon developers the need to build low-cost houses but developers have so far refrained from considering such projects. Now the RBI has done everything needed to solve the liquidity supply problem. Now, the realty companies will have to fall in line, he stressed.

RBIs growth stimulus package announced on Saturday has widened the scope for banks to fund home loan buyers for properties upto Rs 20 lakh. While banks loans to individuals for houses upto Rs 20 lakh are already under priority sector, RBI has now extended it to their loans to housing finance companies (HFCs) who on-lend to individuals within the Rs 20 lakh limit.

The special dispensation for treating loans to HFCs as priority sector lending will boost lending to the housing sector, RBI governor D Subbarao said.

United Bank of Indias executive director T M Bhasin told FE, Earlier, loans given by banks to HFCs for on-lending to home loan seekers upto Rs 5 lakh was considered under priority sector lending. This was unrealistic as homes are not available at this rate. This was also hampering our ability to meet the priority sector target due to the lack of opportunities.

Realty companies, however, seem unenthusiastic about the affordable housing segment, though a few had recently indicated they may consider the business. Their definition of affordable however, seems to differ from the authorities, with most calling for the RBI to accord to priority sector status for loans made to properties worth upto Rs 40 lakh.

The NHB chief, however, isnt impressed. There is no end to such demands. That way, they can ask for the sky also, he said.