Connect with us


Affordable housing emerging as new focus of housing finance firms: Industry



New Delhi, May 29:  With a slew of reforms and push from the government, affordable housing — so far the poor second-cousin of real estate — is emerging as the preferred segment for housing finance institutions and developers alike, say industry stakeholders and experts.

“Affordable housing is now attracting the interest of more developers who had previously shunned it because of its down-market image. Today, it has become a respectable segment and with the government’s determined push… it now plays a very important role in the housing finance sector,” Anuj Puri, Residential Chairman of property consulting firm Jones Lang LaSalle, told IANS.

LIC Housing Finance said it has identified affordable housing as the focus area for the current year and has devised strategies and action plans for greater emphasis on the sector.

Shankara Vaddadi, CEO and Founder of online peer-to-peer lending platform I-lend, told IANS, “With quick turnaround times, this sector is ripe for a new breed of housing finance companies to enter with much lower thresholds and quicker movement on disbursal. This will lead to competition.. we can see a new breed of non-banking financial companies (NBFCs) getting into the sector and making quick inroads.”

According to a report by domestic ratings agency Crisil, affordable homes are altering mortgage market dynamics. It estimates that the segment was worth around Rs 1.6 lakh crore as on March 31, 2017 — accounting for over 25 per cent of all housing loans.

Affordable housing has the potential to be clean and quick, leading to lower operational and marketing costs and helping in creating a new category within the realty space.

Amol Shimpi, Associate Dean and Director, School of Real Estate, RICS School of Built Environment, Amity University, told IANS, “However, it must be noted that the business of affordable housing can prove tricky for the players if enough caution is not exercised. For example, bringing down the construction cost without compromising on quality may be easier said than done.”

While the segment is on a growth curve, the goal of providing affordable housing to all will be achieved by bridging the gap that currently exists between access to capital and execution capability.

The other aspect of affordable housing will be the increasing use of newer material for building houses and construction techniques which might revolutionise the sector.

Brotin Banerjee, MD and CEO, Tata Housing Development Company, said, “The growth and sustenance of this segment is as dependent on a dedicated public-private partnership (PPP) model as it is on the successful creation of infrastructure in the earmarked regions.

“The government’s focus on affordable housing is likely to spur private participation further. The segment can serve as a revenue stream in the wake of slower sales in other categories,” Banerjee told IANS.

Traditionally, the onus of supplying affordable housing has been with public sector entities. However, the entire ecosystem of regulators, developers or banks are coming together to push the government’s objective of “Housing for All”.

Not only the public sector but also private sector banks have reduced the home loan rates to boost the sector. State Bank of India, LIC Housing Finance and Housing Development Finance Corporation, among others, recently reduced home loan interest rates by up to 30 basis points.

Sudhir Pai, CEO, Magicbricks said that the company was already witnessing a spike of 40 per cent in searches and 30 per cent in owner listings since February.

“In addition to the lower rates for home loans, the Credit Linked Subsidy Scheme (CLSS) released by the National Housing Bank (NHB) has also helped. This reduces the effective home loan rate for the borrower,” Pai said.

Under the CLSS, those in a salary bracket of up to Rs 6 lakh a year can avail a credit subsidy of 6.5 per cent on housing loans. In the Union Budget, a 4 per cent and 3 per cent interest subsidy was announced for those annually earning up to Rs 12 lakh and Rs 18 lakh, respectively, on home loans of up to Rs 12 lakh.

Additionally, the rollout of the Goods and Services Tax (GST) is not expected to lead to an increase in the cost to the buyers.

Many construction materials are in the 18 and 28 per cent GST slabs. For example, steel and steel products are at 18 per cent and cement is at 28 per cent. Currently, the total tax burden is calculated at 30 to 31 per cent, which is 2-3 percent more than the proposed GST rate for cement. Also, as an input tax credit is available, the overall tax incidence should be neutralised.

“Thus, the basic construction cost may come down a little, but as the input tax credit is limited to 12 per cent, there may not be much saving in the high-end specification construction,” Surabhi Arora, Senior Associate Director, Research, Colliers International India, said.

“The question for the buyer will remain whether the developer will pass the saving in the form of price correction or not, despite the anti-profiteering clause because it may be difficult to monitor in real time,” Arora said.

Moreover, infrastructure status to the affordable housing segment and Real Estate Regulation and Development Act, 2016 (RERA) are considered crucial moves for its growth.


By Meghna Mittal

(Meghna Mittal can be reached at [email protected])


Chidambaram slams government over ‘economic mismanagement’

“After 5-month-high inflation and 7-month-low industrial growth comes the news of soaring trade deficit.”




New Delhi, July 14 : Senior Congress leader P. Chidambaram on Friday slammed the government over its poor management of economy, saying inflation is at five-month high, industrial growth at five-month low and the trade deficit has soared.

Chidambaram, a former Finance Minister, said in tweets that exports were lower in June compared to May and the imports higher.

He said despite the higher trade deficit, the government would continue to say that all is well.

“After 5-month-high inflation and 7-month-low industrial growth comes the news of soaring trade deficit.”

“June exports lower than May. June imports higher than May. June trade deficit higher by $2 billion. But the government will say all is well,” he said.

Chidambaram said the Congress leaders had estimated that demonetisation would lead to a cut in growth rate by 1.5 per cent and the outgoing Chief Economic Advisor Arvind Subramanian has said that purging high currency notes in November 2016 led to a definite slowing down of economy.

The official data showed on Thursday that retail inflation in India touched the 5 per cent-mark in June, compared to 4.87 per cent in May, even as industrial output in May grew at 3.2 per cent compared to the same month last year but declined as compared to rise of 4.9 per cent in April mainly on account of a decline in manufacturing.

Continue Reading


Online hiring for government jobs fell 20% in June: Report



Representative Image

New Delhi, July 5: Online recruitment activity for government services, including public sector enterprises and defence sector, declined by 20 per cent in June on a year-on-year basis, a report said here on Thursday.

Overall online recruitment in June 2018 fell by three per cent on a year-on-year basis and eight per cent compared with May 2018, the Monster Employment Index for June 2018 said.

“Printing and packaging sector witnessed the steepest decline — 27 per cent year-on-year basis and 15 per cent month-on-month basis,” the report said.

In the agriculture-based industries, online hiring declined by 19 per cent in June 2018, compared with June 2017.

However, the production and manufacturing segment registered a 49 per cent rise in online recruitment. Home appliances segment registered a 27 per cent fall.

“Production and manufacturing (up 49 per cent) led all monitored industry sectors by the way of long-term growth for the third month in succession,” the report said.


Continue Reading


Farmers’ struggle forced Centre to hike MSP: Yogendra Yadav

“It is not the price promised by PM Modi in hundreds of election meetings and contained in the 2014 election manifesto of Bharatiya Janata Party (BJP).”



Yogendra Yadav

New Delhi, July 4 : Swaraj India leader Yogendra Yadav on Wednesday said that a “historic struggle” by the farmers “forced” the government to hike Minimum Support Price (MSP) for Kharif crops, though it is “not the price” what Prime Minister Narendra Modi had promised before 2014 Lok sabha elections.

“The MSP announcements of Kharif 2018-19 is a small victory for farmers. In this election year, the Modi Government has been forced to partially act, at least on paper, on the promise of remunerative MSP that it had made before the previous election,” Yadav said in a statement.

Finding flaws with the MSP announcement, he said that the announced MSP has not been “computed at 50 per cent above comprehensive cost (C2) being demanded by farmers’ organisations.

“It is not the price promised by PM Modi in hundreds of election meetings and contained in the 2014 election manifesto of Bharatiya Janata Party (BJP).”

He also raised concern over implementation of the decision, saying: “It is not an immediate relief to farmers, it is merely a promise, the fulfilment of which depends on government procurement and intensive support, something that has been lacking till now.”

Stressing to make MSP as a legal right, he said that unless MSP is prepared as a legal right, for enforcement, it remains “discretionary” and farmers will be left at the “mercy” of the next government.

Drawing a comparison between the UPA II and NDA governments, Avik Saha, National Convenor of Jai Kisan Andolan, in a statement said: “There is nothing historic or substantial about the MSP hike – it is in fact lower than the hikes given by UPA II government, in respect of almost all crops. For paddy, while the average hike provided by the UPA II was 69 per cent, the Modi government’s hike is only 41 per cent.”

Continue Reading

Most Popular