Real estate is an immensely important asset class, and with the market and stock value’s uncertainty; it has become all the more valuable. The momentum of affordable housing will pick up pace after RBI’s announcement, as it will infuse liquidity in the market. People with salaried incomes are facing difficulties in paying rents during this time, the affordable housing demand will get pushed because of this factor. As more and more people post lockdown with regular income jobs will think about purchasing their own homes. The recent announcement of banks switching to reduced home loan rates will also give a boost to the affordable housing sector.
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Housing for all and sops to buyers and developers saw many affordable housing projects come up. Now, the fear was that limited income and unemployment post COVID-19 will hit the sale of affordable housing with buyers deferring home purchases. However, we foresee that substantial movements will be visible in the affordable and mid-income housing segments. These segments, driven by end-users are expected to largely remain resistant to any price corrections. It is mainly due to the realization that owning a home is important. This class also faced difficulties in coping with rents during the lockdown and having to stay put in ungated areas with no security. This segment always had the demand and post COVID-19 it will increase manifold as fence-sitters will buy now.
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Amid the gloomy scenario of fewer site visits, there was a notable rise of 20 per cent in enquiries as people are having plenty of extra time due to lockdown. The demand will also get thrust from the government’s redressal measures. Reduction in repo rates will make home loans more affordable. Likewise, iterations of reverse-repo rate cuts will ensure that the money is not kept in banks but will float in the system, thereby injecting liquidity. The Government has also pledged to recapitalise NBFCs alongside earmarking Rs 10,000 crore for the National Housing Bank (NHB). This will ensure a smoother flow of capital to HFCs thereby expanding credit support to developers- one of the much-required steps.
Realtors have already started planning to make the deliveries as quickly as possible to meet the growing demand. Technologies such as Aluminum Form Works technology will come to the rescue, as it will help reduce the time of construction as concrete walls are used instead of brick walls. This technology helps in fast-paced construction, due to which projects are completed before time. The affordable segment has to look towards such technologies to complete the projects as soon as possible without making the buyers wait for too long.
The affordable housing sector will get the required push if immediate fund releases as per the budget allocation are introduced by the government. The sector enjoys the status of infrastructure; along with it, a single-window clearance system would help maintain the momentum. Since the past few years, the sector has been fighting against uncertainties and challenges. Earlier as well, the sector has shown resilience and successfully absorbed many shockwaves such as RERA, demonetisation, GST implementation, NBFC crisis. This time as well, the sector will be able to contain the risk from escalating to a larger extent and emerge stronger.
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In conclusion, infusion of liquidity in the market is of utmost importance and the latest announcements will help the economy. This time the RBI has addressed the realty sector too, which is a clear indication that the government understands the importance of the second largest employer in India. If a GST cut of 50 per cent across all boards for one year is introduced, it will further help the entire economic machinery of the country to come out of this conundrum very soon.
The author is the Founder & Chairman, Signature Global and Chairman,
ASSOCHAM – National Council on Real estate, Housing & Urban Development
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