New Govt lists top 3 priorities for Housing sector

With Venkaiah Naidu, a member of Prime Minister Narendra Modi’s Cabinet, assuming charge as Urban Development and Housing and Poverty Alleviation Minister (HUPA), the realty sector is aspiring for good days ahead. CommonFloor presents you the three priorities listed by the new HUPA minister that could be a game-changer for the sector.

Housing for all by 2022

As per the agenda, when India celebrates its 75th Independence Day, every Indian family will have a house of its own. Currently, India faces a massive housing shortage. According to a report by Ministry of Housing and Urban Poverty Alleviation (MHUPA), in the year 2012, India’s housing shortage was estimated at nearly 18.78 million households. Though a tedious task, Modi’s cabinet is quite ambitious to fulfil the dream of their leader.

So, is it possible? Well, if there is a proper framework with Public-Private Partnership (PPP), where state government and municipal bodies work together, the dream is very much achievable. Further, Vivin Mathews, Regional CEO, Western Region of Value and Budget Housing Corporation Pvt Ltd (VHBC), a pioneer in affordable housing says, “faster approvals for projects is the need of the hour. Due to unending delays in approval process, the cost of construction continue rising, thereby increasing the overall cost of the project. Thus, if single-window clearance is there, building affordable projects will be much easier.”

Today, the construction cost is growing at a faster pace. Thus, reducing the construction cost is also a necessity.

Reduced Interest rate on home loans

With soaring property values, denizens are forced to take a home loan route for buying their dream home. However, in past few years the interest on home loan has also increased manifold making it difficult for a mid-segment home buyer.

While addressing the media fraternity, Naidu said, during the Atal Bihari Vajpayee’s regime, from 11 per cent the interest rate was brought down to 7 per cent. Now it has crossed the 10 per cent mark.

He further suggested that corporates should take care of the housing needs of their staff. And PSUs like LIC, banks, railways, should not only take care of their serving persons but also their ex-workers.

Improved Infrastructure

Since JNNURM was a project initiated by the UPA government, it will no longer be continued. Instead a new scheme will come into existence. Apart from building 100 new smart cities with world-class infrastructure, the existing infrastructure will also be improved.

Naidu assured that all these points will be discussed with the Finance Minister Arun Jaitley, so that these are considered for the upcoming budget that will be tabled in the first week of July.

Interestingly, new cabinet ministers seem to be on their feet in making Modi’s dream turn into a reality. With an aim to ‘undo all wrongs done by the predecessors’, the new finance minister has listed few things that will be addressed in the new budget. Also, as middle class helped the ruling BJP government score Mission 272 plus in the elections, they are expected to highly benefit from the upcoming budget.

The two key highlights of the upcoming budget that will help the realty market are incentives for the first-time home buyers and reduced home loan interests. If these two come into action, it will surely infuse positive sentiments in the market that in turn will boost the tumbling sector.

Though incentives for first time home buyers are expected, we hope that they do not come with a catch like the budget of 2013. In the last budget, an additional deduction of up to Rs 1 lakh on interest was announced for the first time home buyers, however it came with a catch that the property should not cost more than Rs 40 lakh. Thus, it was a lucrative offer only for buyers in Tier II and III cities, and not for metro cities as getting a property within Rs 40 lakh is like a distant dream in Tier I cities, unless one move to the suburbs.

So, will Arun Jaitley’s budget live up to the expectations of the realty sector? Well, we will have to wait and watch!