With Prime Minister Narendra Modi getting a second term in a landslide victory, the affordable housing segment is expected to continue to get the much-needed boost to reach its true potential.
Modi’s ‘Housing For All By 2022’ policy is largely dependent on providing affordable housing pan-India by incentivising developers and homebuyers with schemes and benefits. Now, armed with an approval from the public for his various policies, which led to NDA getting a second term, one will witness a refreshed approach that provides the right ecosystem for the affordable and mid-income housing segment to grow.
What we have witnessed in the last five years of Modi government’s policies, including RERA, GST and demonetisation, has definitely helped the segment to build a stronger foundation and to weather storms that come its way.
The affordable and mid-income housing has seen consistent growth in new launches and absorption of housing units over the last five years, with all market indicators pointing to an upward trend. In the last five years, the Indian government has also provided various benefits to promote affordable housing, including the ‘Pradhan Mantri Awas Yojana’ (PMAY), an initiative in which affordable housing will be provided to the urban poor with a target of building 20 million low-cost houses.
Apartments qualifying under the PMAY scheme, wherein various concessional schemes of the government, like interest subvention under the Credit Linked Subsidy Scheme (CLSS) and concessions on GST, among others, are available. Developers pass on these benefits to the customers on the basis of their eligibility, which significantly reduces the end cost of ownership of the housing units.
We expect these benefits to continue under Modi 2.0, as this has helped many first-time homebuyers to directly benefit from government schemes.
The sector has a lot of expectations from the new government to bring in more liquidity into the realty sector and provide conducive environment for other developers to finish stuck and stressed housing projects. In the recent past, many top developers have taken over the stuck projects from developers, who were able to deliver it after several years of delay. The biggest impact on real estate, which happened in Modi 1.0, was the Real Estate (Regulation and Development) Act, 2016 (RERA). But even the almighty RERA has not been implemented in letter and spirit in several states in the country. We expect the Centre to convince state governments reluctant to follow RERA in its current avatar. This would further help boost buyers’ confidence. In the next few years, there is a very strong possibility that India will have single-window clearances for real estate projects. Taking various clearances leads to wasting several months before a developer can launch a project. That, in turn, impacts its marketing strategies.
Almost all housing finance companies (HFCs) are now more than interested in backing affordable and mid-income housing segment, as they have clearly seen the level of interest that the government has shown to ensure that Housing For All is a success.
There are now dedicated funds by leading investment banks to put money only in affordable housing projects, a scenario that was talked about at various housing summits and events, but never implemented on ground.
Fortunately, the buyers’ market —which the current real estate sector is at the moment — makes for a scenario that promotes healthy competition. It will also wean out fly-by-night and unorganised developers from the market.
It is not surprising that the housing sector’s contribution to the Indian GDP is expected to reach 11 per cent by 2020, as several ancillary industries are codependent on its growth.
Going ahead, we will experience a cohesive approach by the central and state governments to make housing a reality for the common Indian and quicker delivery of homes by developers.
The Modi government has made an ambitious attempt to put a roof over every Indian’s head under the policy. And now with this historic win under its belt, the Modi-led NDA will ensure that the policy will be implemented.