1. Narendra Modi government gives big home loan boost to housing in India; demand set to soar

Narendra Modi government gives big home loan boost to housing in India; demand set to soar

Cheaper loans should boost demand and help revive real estate sector; apply to slightly bigger homes as well.

By: | Mumbai | Published: November 17, 2017 6:35 AM
Narendra Modi, Narendra Modi government, home loan, home loan boost, housing in India, real estate sector, Real Estate Regulatory Authority, rera Cheaper loans should boost demand and help revive real estate sector; apply to slightly bigger homes as well. (Image: PTI)

The government on Thursday made loans cheaper even for slightly bigger homes bought by middle-income groups in a move that should boost demand and help kick-start the real estate sector. The pace of home purchases has tapered off sharply for several reasons; while buyers have been waiting for prices to come off, the roll-out of rules under Real Estate Regulatory Authority (RERA) in July has held back new launches. Demonetisation too is believed to have hurt home sales; the inventory of unsold apartments across India is estimated at close to Rs 6 lakh at the end of September. Keki Mistry, vice-chairman, Housing Development Finance Corporation, noted the lower interest for larger homes should spur purchases. However, the caveat that those already owning a property would not be eligible to a lower interest, Mistry felt, should be done away with as there were several buyers wanting a second home. The Cabinet on Thursday approved a proposal that will allow those with an annual income of up to Rs 12 lakh to buy or build a house of up to 1,200 sq ft; earlier the area was capped at 900 sq ft. Those with an annual income of up to Rs 18 lakh are now eligible for loans at a softer rate to buy or build a home covering 1,500 sq ft; this was 1,100 sq ft earlier. Purchases in the secondary market are also covered by the scheme.

PK Gupta, managing director, State Bank of India, said the new rules would encourage more purchases at a time when buying had slowed somewhat. Gagan Banga, vice-chairman and MD, Indiabulls Housing Finance, said given how buyers preferred slightly larger homes in the Tier-II and Tier-III cities, several potential buyers had not been able to take advantage of the soft loans. “We expect many of them will not use the opportunity to buy homes now,” Banga said, adding sales could see a spurt in cities such as Pune, Chandigarh, Ludhiana and some pockets in south India. Crisil Research wrote recently that demand for residential property was unlikely to revive in the next 12-18 months.

“Though capital values have been under pressure over the past few quarters, a significant chunk of supply in many micro markets remain unaffordable,” analysts at the ratings agency observed. The total outstandings of mortgages with banks at the end of September was 12.8% higher than those in September 16. This was slower than the increase in outstandings between September 2015 and September 2016, when they had grown 18%. Since demonetisation the pace moderated to a monthly average of 15%. That’s despite an effective asset price correction of around 5-10% in H12017. However, housing finance companies have, over the past year, disbursed at a fairly fast pace.

Earlier this year, the government had allowed buyers with an annual incomes of between Rs 6 lakh and Rs 18 lakh to borrow at concessional interest rates. Approximately 3.5 lakh homes of the registered 6.7 lakh apartments in Mumbai Metropolitan Region have not found buyers so far, according to data on the MahaRERA website. Experts say developers are looking for more affordable locations to make homes affordable. “Developers are building smaller apartments because compact two-bedroom homes are selling faster at the moment. The interest subsidy for slightly bigger homes will help clear off inventory from older projects,” said Rohit Gera, MD, Gera Developments.

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    ar21dumbre@yahoo.com
    Nov 19, 2017 at 10:47 pm
    On Insurance - Sector - Exide Life is refusing Maturity payment benefits to policy holders,who had taken Critical Illness Policy. If any policy holder has not fall sick and did not get any benefits of the policy in whole term / tenture of policy? Is it not cheating? Request to check the provision of the law and help to many thousand .My self is the victim. Small fine print in the policy only one line is affecting the policy holders my 14 years not taken any benefits and now losing the maturity payout > I think the policy is one sided and not giving any flexibility to the person At last what for the policy or insurance are offered ?What s the benefits to the honest person. I strongly object to the view / decision of the company, it is not because I lost but because of many more will became victim of this gross cheating
    Reply
    1. a
      ar21dumbre@yahoo.com
      Nov 19, 2017 at 10:35 pm
      Sir -ON GST, Request you to rethink GST on Funeral material ,which is 18 now? Make it 5 or 0 as most peoples are not thinking for the money required at final stage of Funeral but it is very high.
      Reply
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        Vijay
        Nov 18, 2017 at 6:30 pm
        how can it be beneficial for someone who earn up 3 lacs per year or middle class , lower middle class people who live on daily earning this is just scheme for riches not for middle class people all this scheme come up at the time of election but when the election over politicians does not even care about the people who vote them anyways it was a big disappointment to vote for this government who just thinking about rich in the name of poor middle class people
        Reply
        1. Amardeep Kukreja
          Nov 18, 2017 at 6:03 pm
          Firstly get the facts correct Reckoned rates are based on carpet area and builders charge as per built up area. That means direct loot of 40 above actual cost price Forget about the infrastructure and GST charges
          Reply
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            Sangoram Chetan
            Nov 18, 2017 at 3:21 pm
            Govt has done correct thing by limiting lower interests for 1st home buy only, let Keri Mistry or anyone demand 2nd and 3rd home freebies but that’s dangerous for economy. Real estate is rented industry unlike technology or manufacturing or agriculture, it may give rosy picture in short term but mess up economy permanently.
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              Jubin
              Nov 18, 2017 at 2:27 pm
              Does this increase boost in housing sector. Its just refreshing a matter to keep matter in news to favour the government as its Poll time. Does it anyway address the middle class ? And even ig the poor wants to buy then is those inventory available in those 6 lac inventory as mentioned in this news... Whoever is in power it important they dont mock the citizen by making things which are only good to the ears and not in practical. The way this news is picturized is as if all will run to the bank and take loan and real estate sector will boom in next few weeks ? This is just a white was of the earlier scheme which probably did not work well so increase the area with the finance limit being the same. What important is having practical scheme not just something not useful, which inturn will increase the chain of comments on government performance and take political turn. If government is serious then it should bring scheme that benefit country than for political mileage.
              Reply
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                Vishal sharma
                Nov 18, 2017 at 12:48 pm
                Well it's all because of hasty decision one after another and no control on prices . Now Mumbai real estate market is no more investor market. God save the real estate market.
                Reply
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                  Shiva
                  Nov 18, 2017 at 11:28 am
                  This home Loan facility eligible for only who getting 12 to 18 lakh annual income?, Come on how possible with lower class and atleast middle class families. Rich becomes more rich Poor becomes more poor!!!
                  Reply
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                    Sangoram Chetan
                    Nov 18, 2017 at 3:16 pm
                    Shiva for affordable housing already there is priority sector like lending from 2015, thus is in addition for middle class.
                    Reply
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                    Sushant
                    Nov 18, 2017 at 9:42 am
                    Such schemes won’t help unless prices are rational. 2BHK(~70 sqmt) in Bangalore reaches 1CR, how can anyone even think of buying. Govts data doesn’t match the reality of the time, hence such scheme can’t help us.
                    Reply
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                      kuldeep gautam
                      Nov 18, 2017 at 7:12 am
                      is it pradhan mantri awas vikas yojana which has extended the benefits?
                      Reply
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                        Rajesh
                        Nov 18, 2017 at 1:20 am
                        Inventory of unsold houses is just 6 lakhs ? It’s 6 lakh crores and the builders have amassed such a wealth that they don’t mind staying not working for another 10 years . Government has to step in and make theses houses available and get the confidence of the people who have supported them .
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                          Jax
                          Nov 18, 2017 at 12:23 am
                          Another useless scheme ! Just number n mind manipulation .
                          Reply
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                            Rajeev Shankar
                            Nov 17, 2017 at 4:19 pm
                            Provisions are made for ried,,,but not for self employed middle section of society, THE PM'S CORE CLASS,. WITHOUT WHICH,The mission of HOME FOR ALL would remain incomplete,!!!
                            Reply
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                              Venkat
                              Nov 17, 2017 at 2:45 pm
                              When will this new rates be applicable?
                              Reply
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                                Vijay
                                Nov 17, 2017 at 12:11 pm
                                Dear sir, you must be aware of builder-bank-authority-govt nexus that duped millions of homebuyers. Homebuyers have spent their life time savings, taken bank loan, paying rents, no tax relief for under constructed property. we have cut our children education fees and other expenses to bear emi and rent burden.RERA has been diluted to protect builders.Builders threatning homebuyers. Buiders shipphoned their money to s companies, relatives foreign. They falsely claim that they became bankrupt and homebuyers dont come in creditor's list. Please do justice as our lives and our future generation lives depend on homes. I want to remind your promise of protecting homebuyers and your mission of "homes for all". Jai Hind! : nm-4 /dgp5 via NMApp
                                Reply
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