Affordable housing company shares rose sharply, extending morning gains, as Finance Minister Arun Jaitley brought affordable housing under infrastructure sector, extending benefits to the people investing in building low-cost homes. This is expected to extend the sops to the segment of the public not already covered under the Prime Minister’s housing scheme.
Ashiana Housing shares soared 9.25% to Rs 158.9; Indiabulls Real Estate rose 1.19% to Rs 76.35; and NBCC (India) was up 1.48% at Rs 275. Other top developers including DLF, Oberoi Realty, Godrej Property also rose, by 1.63%, 2.23% and 2.02%, respectively. The Nifty Realty index rose 1.25% amid choppy markets.
Shares of housing finance companies also rose. Housing Development Finance Corp – India’s largest housing financier – was trading at Rs 1,382.3 up 1.2%. While presenting the Union Budget 2017, Jaitley brought affordable housing under the ambit of the infrastructure sector, making this segment eligible for various government incentives and attractive for foreign investors.
However, Jaitley did not announce any new interest subsidy on loans for low-cost housing.Currently, affordable housing does not have a formal definition by the government but is generally considered to be what is within the affordability of those whose income is below the median household income.
He said that the bank lending rates, including those for housing loans, are already coming down in wake of surplus liquidity created due to demonetisation.
Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana in 2015, with an aim to help provide housing for all by the year 2022 by building 2 crore houses. The scheme provides for an upfront subsidy for low-cost housing and an interest rate subsidy of 6.5% for loans up to Rs 6 lakh taken for the purpose.
In his address to the nation on the new year’s eve, Modi has already extended the scheme to cover loans up to Rs 9 lakh and up to Rs 12 lakh, with interest subsidy of 4% and 3% respectively for home loans taken under this scheme.
The government appears to be taking a lot of measures providing incentives to spur the economy in order to counter the impact of demonetisation. Earlier last month, the Union Cabinet approved a new interest subsidy scheme for promotion of rural housing to provide subsidy to the rural households not already covered under the Pradhan Mantri Aawas Yojana (Grameen), (PMAY[G]). The scheme will be available for people in rural areas who construct new houses or add to their existing pucca houses to improve their dwelling units. The government will give 3% subsidy on loans up to Rs 2 lakh.