Affordable Housing in India

News Posted - 2010-01-27

NEW DELHI: The global rating agency Fitch on Wednnesday warned that hardening of interest rates could jeopardise the prospects of the real estate sector in the coming months.

"Any significant increase in property prices and a tightening monetary policy, could have an adverse impact on the future demand," Fitch said in a report on the domestic realty market, two days ahead of the Reserve Bank's monetary policy review.

The apex bank is slated to announce the third quarterly credit policy on Friday, in which it is expected to strike a balance between the conflicting needs of contain inflation and promoting growth.

The RBI had in its half-yearly review of the monetary policy raised the standard asset provisioning requirements for banks from 0.4 per cent to 1 per cent.

The Fitch report also said affordable homes would drive the housing sector in the coming months, while the commercial real estate will have to wait for some more time for recovery.

"The affordable entry segment should continue as the primary growth driver in the Indian residential sector for 2010," the rating agency said.

"The commercial segment continues to remain under pressure. We expect demand for commercial space to improve in the second half consequent to the expected resumption of hiring in key sectors like IT/ITeS and financial services," Fitch added.

The rating agency said as retailers move back into the expansion mode, there could be a pick up in volume and rents to stablise in the second half of the year.

Affordable Housing in India

Affordable Housing in India has become the new Mantra for everyone related to the realty sector in the country. From buyers to the sellers to the realtors and investors, everyone is pitching for affordable quality homes in India. The story begins from the realization of the huge unmet demand for affordable housing in India since the premium section is witnessing an oversupply. As the real estate property market experienced recession in late 2008 with a downfall of upto 50% in property prices, various realtors have started looking for measures to take control of the situation.

Affordable Housing Prices

For the ongoing projects, the prices have already fallen down by around 15% in major metropolis cities like Delhi, Mumbai, Hyderabad, Bangalore, Kolkata, Chennai, Pune, Gurgaon, Noida, Greater Noida etc. In terms of the completed projects the prices have hit a low of more than 43% in major property markets of the cities. Since the economic slowdown has resulted in bringing down the commodities prices as well, the cost of construction has also come down. The fall in cement prices by over 40% and steel prices by around 20% that constitute a major chunk of construction costs has compelled the developers to pass on the benefit to the end buyers. Thus, the demand of affordable quality homes in India within the price range of Rs. 15 - 30 Lakhs is soon to become a reality.

Affordable Housing Projects in India

During various national and international conferences held in the country, indications regarding increased FDI in Realty Markets in India, increase in number of available Real Estate Funds and reduced interest rates on Home Loans have surfaced. Various Banks have also announced reduced rates for loans to the real estate developers for affordable housing projects in India. To cater to excessive unmet demand of low budget housing in India, The Planning Commission, RBI, The Finance Ministry and various Financial Institutions have extended full cooperation to the realtors to jointly undertake a series of measures for affordable housing in India.
Various builders in India have announced projects catering to the low budget housing in India with 1 & 2 BHK apartments projects targeting the Lower Income Groups and EWS (Economically Weaker Section) Categories as well as affordable 3 & 4 BHK flats for the Middle Income Groups. The Individual Unit prices of the houses under the affordable housing projects in India are touted to be around Rs. 5 - 25 Lakhs for 1 & 2 BHK Flats, Rs. 25 - 40 Lakhs for 3 BHK and Rs. 40- 60 Lakhs for 4 BHK Units.
Renowned Builders & Developers like Ansals, DLF, Omaxe, BPTP, Unitech, Vatika Group, Raheja etc. have advertised projects under affordable housing in India. Thus, the dream of the common man of owning an affordable quality home in India is not far.