Rise in Demand for buying houses in the affordable housing segment.
There has been a good rise in Demand for buying houses in the affordable housing segment. The major customer base for flats that are offering the affordable housing flats are people of the middle-class or the upper-middle class. Even in the middle-class segment mainly the salaried people are going ahead for purchases. As the majority of India’s population comes under middle-class there are many people who are actually very interested in buying a house In these projects. Hence, there was a major rise in the demand for buying houses that come under the Affordable housing segment.
There was a study that was conducted by a couple real estate firms and consultancy firms that showed that the top 5 cities in India that are.. Chennai, Hyderabad, Mumbai, Delhi-NCR, Ahmedabad have a very high and rising demand for affordable housing. This increase in demand has led to the big players in the market to build houses that do not exceed 50 Lacs. Builders have started targeting the suburbs of the cities for people to make future investments.
The change in mentality of people in recent days has also led to the rising demand in the affordable housing sector. In the early days people preferred buying land and making the house themselves as they used to live as joint families. Now, in modern India there is a major rise in the number of people living independently or in nuclear families with a maximum of 1 child.This eliminates the option of building the house from the ground up. With all these developments happening there is a major rise in the demand for studio and 2BHK apartments.
In the most recent days the Government has also taken up initiatives to give the common folks buying apartments in these segments a good benefit under PMAY. The Government has also reduced the taxes that used to be levied on real estate. The GST for these houses is just a mere 1% which relieves buyers from the additional charges that used to be prevalent! The migration of people from the rural areas to the city has also had a major increase.
The booming economy and the rise in pay-out’s for an individual has made it possible even for the younger generations to buy properties these days but only in cases where the prices are realistic!In the last couple of years, affordable housing is the only segment where transactions have happened in real estate. Pradeep Aggarwal, co-founder and chairman of Signature Global, which has delivered one affordable housing project and has 12 others in the pipeline, talks about why the segment is getting traction and its prospects.
There are various reasons why the real estate market is in such a situation since the last 5-6 years, but the most important factors that affected the real estate sector was absence of a regulator and mismatch in demand and supply. In any unregulated industry, it is easier to take things for granted and this has backfired in real estate. Besides, mismatch between demand and supply and decline in speculation-driven demand impacted sales. Now there are no speculators because those unrealistic price escalations are not possible anymore.
As far as affordable housing is concerned, you need to understand that 95% of the country’s population consists of the lower middle class or economically weaker section. These sections are driving demand in affordable housing. Moreover, in the past few years, the government’s focus and incentives to developers as well as homebuyers was why demand in the segment went up. I look at affordable housing from a different perspective; it is not just real estate, it is the need of the masses.
It is difficult to segregate the buyers. But about 70% of the buyers in this segment are salaried individuals. This salaried class, I suppose, is buying it either for own use or may opt to rent it out later. I don’t think there are any speculators in this segment, because if I talk about Haryana government’s affordable housing policy, there are restrictions on transfer of property till the buyer gets possession and even a year after that. I consider them as end users or serious investors, and not someone buying for speculation.
The next biggest initiative that has contributed to the residential market boost is Affordable Housing, by the ruling Indian government. Incentives as part of the same have been aiding in the recovery of the overall sector, by augmenting housing supply. Developers have been investing a lot more into infrastructure and better connectivity, thereby fortifying this progress.
The government’s ‘Housing For All by 2022’ vision as part of Affordable Housing is expected to be the key catalyst of it emerging as the most powerful segment in the residential real estate market in the near future, with the biggest developers heavily investing in it. The segment contributing to 41% of new supply in 2018 serves as a testament to this market forecast, All of these well-defined policies, initiatives, and incentives, combined with the changing dynamics of the nation’s population make for reflection of greater developments in the real estate industry. With student housing on an all-time high, coupled with the Government’s continued efforts with regard to the affordable housing initiative, the real estate industry in India is primed for a magnificent comeback. Moreover, with the rising number of the young working population, there is an ever-growing demand for housing, thereby affirming the immense potential for residential real estate to hold its own as a lucrative market for investment