SECTORHAILSRATECUTANDAFFORDABLEHOUSING

INCENTIVES
Asthefinaldayofthepreviouscalendaryeararrived,entirenationwaswaitingforthelate
eveningwhenourHonourablePrimeMinisterNarendraModiwastoaddressthenation.
Sincehisaddresson8thofNovemberlastyear,whendemonetisationoflargecurrencywas
announced,everyonewasundertheimpressionofwhatnewpolicymightgetimplemented
ontheNewYearEveof2016.Duringtheaddress,PrimeMinisterthistimeannouncedsome
NewYeargiftsforthepublicthatreceivedacherryonthetopwhenseveralleadingbanksin
thecountryslasheditslendingratesbyalmost0.9percentor90basispoints.
Boththenewsnowcarryheavyweightagefortherealtysectorofourcountrywhichhashigh
hopesfrom2017.Movinginto2017,itwillbetheyearofaffordablehousingsegmentand
nowespeciallywiththegovernmentannouncingincentivesforthissegmentsprospective
buyersandbanksreducinglendingrates,wewillnowwitnessmorelaunchesofaffordable
housingprojectsthananyothersegmentintherealtysectorofIndia,believesPradeep
Aggarwal,Chairman,SignatureGlobal.
Duringtheaddress,twonewhousingschemeswereannouncedcitingthefactthatthereare
stillmillionsofpeoplewhodon'townapropertyeitherduetoaffordabilityfactororhigh
interestrateswhichsubsequentlyincreasestheEMIs.Fortheurbanpoor,in2017,arebateof
4percentand3percentwouldbeprovidedonhomeloansuptoRs.9lakhsandRs.12lakhs
respectively.Also,forthenewhousingorextensionofhousingtakenupon2017,arebateof
3percentwouldbeprovidedonhomeloansextendinguptoRs.2lakhs.PMModifurther
addedthatthenumberofhousesbeingbuiltforthepoorunderthePradhanMantriAwaas
Yojana(PMAY)inruralareaswasbeingincreasedby33percent.Withannouncements
suchasthese,weareinchingclosertowardsfulfillingthedreamofbuilding2crore
affordablehousingunitsfortheurbanpoorby2022.Whenlendingratesarereduced,it
allowsthemarkettocreatefreshdemand,andinthiscase,developersacrossthecountrywill
focusondevelopingaffordablehousingunitswhichwillbesupportedbyreducedlending
rates,andgladlyacceptedbythebuyers,explainsVikasBhasin,MD,SayaGroup.
Addingfurther,KushagrAnsal,DirectorofAnsalHousingpointsoutthat,Sincethe
affordablehousingandhousingforallmissionshavecomeup,developerlobbyacrossthe
countryhasshifteditsgearstowardsdevelopingbudgethousesmajorly.Almost50,000units
aregettingreadytobedeliveredby2022inGurgaonitself;andacrossthecountry,this
numberismultiplyingattherateofknots.Thisinthelongrunwillallowthecountrytomeet
thedemandagainsttheshortageofbudgethomesandalloweveryonetogetaroofovertheir
heads.
Speakingabouttheannouncementofbanksreducingthelendingrates,PradeepAggarwal
adds,Banksreducingthehomeloanratesbyupto90basispointsisingeneralagreatnews
forthesectoraheadofUnionBudget201718.Mostofthepeoplebeginpropertypurchase
planningaroundthebudgetperiodsoastogetclarityabouttheirfinancialyearahead.Thisin
turnwillallowdemandforhousingtoincreasethisyearthatwillhelptherealtysectortogain

momentum.Affordablehousingsegmentwillreapoutthehighestbenefitsasaresultofextra
cushionprovidedbythegovernmentsrecentdecision.
SeveralleadingbanksinIndiahavecutdowntremendouslyonthelendingrates.For
instance,StateBankofIndia(SBI),reduceditsmarginalcostoffundsbasedlendingrates
(MCLR).ForSBI,thenewratesare8percentagainst8.90percentforoneyearloans,8.10
percentand8.15percentrespectivelyfortwoyearandthreeyearmaturity.Forotherfew
banks,oneyearMCLRstandat8.45percentagainst9.15percentforPunjabNationalBank
(PNB),8.65percentagainst9.30percentforUnionBankofIndia(UBI)and9.15percent
against9.30percentforIDBIBank.Consequently,homeloanborrowinghasalsocomedown
drastically,signallingaboosttohousingdemandfornearfuture.Forexample,women
borrowersofSBIanavailhomeloanat8.60percentand8.65percentforothers,thereby
savingadecentamountontheEMIs.
Withthegovernmentsannouncementofrebateonlendingratesalongwiththebanks
providingratecutcushiontothepublic,affordablehousingsegmentisthebiggestgainerof
all.Citingtheexampleofthelowestrateinthemarketatpresent,8.60percent;affordable
housingprospectivebuyerswillbebasicallyborrowingnowat4.60percentor5.60percent
forloansuptoRs.9lakhsandRs.12lakhsrespectively.EMIsforthiscategoryhasfallenby
almost40percent,whichwillenhancethedemandforhousingamongstthebuyers,
elucidatesDhirajJain,Director,MahagunGroup.
ItsjustthebeginningofaratecutcycleinIndia.Banksatpresentarecarryinghighvolume
ofliquidityduetothe50daysofdemonetisation.Itwaswellforecastedthatratecutswill
beginsoon.RBIsnextpolicyreviewisdueinFebruaryaswellastheUnionBudget2017
18.Hopesarehighformoreratecutsinnearfuturewhichwillfurthereasethepressureoff
theeconomyandallowgreaterspending.Thishighpurchasingpowerwillresultinpeople
optingrealestateasanavenueforreturnsaswellasresiding,aseveninterestrateson
depositsaredecreasing,thusmakingthemlesslucrative.Inanutshellthough,realtysectoris
onatrackofgrowthwellsupplementedbysuchinitiatives,concludesRajeshGoyal,Vice
PresidentCREDAIWesternU.P.&MD,RGGroup.