Gone are the days, when builders only developed apartments or luxury homes for minority section of the society like elite class or money making business tycoons.
Developers have made a move to work for mid-life people so that every person of the society can buy a house. They have made this huge transformation from luxury homes, Jacuzzis to a 1/2/3 BHK house. This move will strengthen their connection with every section of people in the society. This has been possible because house loans have become affordable and this has attracted more buyers.
This year has seen banks providing loans majorly in the housing sector. If we look into figures there has been a rise in the loan percentage every month, as January loan applications rose 21% over December, February saw a slight raise with 24% and March witnessed the maximum raise with 44% than previous months.
What has driven this tremendous growth are affordable home loans as average loan size is 25.6 Lakhs now, which has never happened in the past that loan size would drop below 26 Lakh.
Housing finance providers are now expecting the affordable homes segment to grow at 25% given the subsidy under the Pradhan Mantri Awas Yojana. The scheme provides 4% subsidy on home loans of up to Rs 9 lakh for those with an income of up to Rs 12 Lakh per year, and 3% subsidy on loans of up to Rs 12 Lakh for those earning up to Rs 18 Lakh per year. This scheme is available until December 2017.
Demonetisation played its share of the role by reporting the biggest decline in sales between October-December 2016. Real Estate went through the turmoil during the last few months of 2016. There was a slight increase in sales between January-March 2017 as the situation was slightly better in the beginning of the New Year.
Effective home loan rate in the mid-income affordable housing segment is at near-zero levels. As owning a house has become cheaper than renting a house.
The finance is becoming more available for housing units as the prices have even dipped to Rs 12 Lakh. There are people who are not getting loans, so there are many housing finance companies coming up to provide loans. These firms are able to do credit assessment using alternative methodologies or mechanisms for those in the informal segments making sure every individual of a society can avail loans.
As per PMAY (Pradhan Mantri Awas Yojana), the government is targeting economically weaker sections of the society to boost mass housing. The affordable housing segment is likely to grow at a faster pace than industry at over 25%.
The Developers have a sigh of relief, as they are exempted from paying taxes on their profits for five years starting 2016 instead of three years. This is applicable only to 300 sq ft homes in the four metro cities and 600 sq ft in non-metro areas.
There has been a move to allow 90% money of PF to purchase homes as well, just to make sure everyone can buy their house. This move to make housing affordable is going at a faster rate making sure every member of the society has their home registered on their name.