With focus of the government the affordable housing segment is finally emerging as the key growth driver for the housing loans market. This has pushed the builders to be moving towards the affordable apartments in favor of the middle class pockets.
Now with the sale of the houses costing below 30 Lakh, the home loans are also available with a sharp uptick providing interest subsidy for the affordable housing segment. According to the finance providers, with the interest subsidy under Pradhan Mantri Awas Yojana this housing segment is expected to grow at 25% .The scheme will be available until December 2017, with 4% subsidy on home loans of up to Rs 9 Lakh for the income group of Rs 12 Lakh per year, and 3% subsidy on loans of up to Rs 12 Lakh for the earner up to Rs 18 Lakh per year.
“Developers across India, are seems to be moving toward Affordable Housing sector to suit middle class pockets as this segment is expected to grow with 39% higher allocations under the Prdadhan Mantri Awas Yojna, – extension of the credit-linked subsidy scheme to loans of value upto Rs 1.2 million. All these have resulted into the uptick in the home loans resulting into the engines of growth for this sector benefitting both developers and home buyers.”– said Mr. Ssumit Berry, Managing Director, BDI Group.
According to HDFC chairman Deepak Parekh , the corporation’s January loan applications rose with 21% over December,24% higher over February and in March 44% more than the previous month .
“What is driving this growth is not high-value property but affordable homes, considering that the corporation’s average loan size is Rs 25.6 Lakh. This is the first time in several quarters that HDFC’s average loan size has dropped from Rs 26 Lakh,” Parekh said.
The investment bank CLSA states that in addition to interest subsidy, the move to allow 90% of provident fund money for home purchase is driving the demand. “While growth in the prime home loan segment could witness moderation, the affordable housing segment is likely to grow at a faster pace,” said Rohit Inamdar, Group head, Financial Sector Ratings.
Now a range of housing finance companies have come forward for the customers who were not providing loans traditionally. The easier access to Bank loans with interest concessions has caught both the buyers’ and developers’ interest more towards affordable housing.