Af­ford­abil­ity is the big­gest fac­tor af­fect­ing sales

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - HT Es­tates Cor­re­spon­dent ■ ht­es­tates@hin­dus­tan­times.com

What is the big­gest ques­tion in the mind of the de­vel­op­ers post de­mon­eti­sa­tion? Re­vival of sales takes pri­or­ity in the present cir­cum­stances for the sec­tor’s re­vival.

The first and fore­most step that the in­dus­try needs to take is to make houses more af­ford­able. Cur­rently, the big­gest fac­tor af­fect­ing sales is the un­af­ford­abil­ity of the home­buy­ers. House prices till 2012 have in­creased sig­nif­i­cantly faster than the in­come level of home­buy­ers.

Dur­ing the last four years, the growth in res­i­den­tial prices in most of the top eight ci­ties of In­dia has been be­low re­tail in­fla­tion growth – a clear re­flec­tion of time cor­rec­tion. But still this is not enough to make hous­ing af­ford­able to a ma­jor­ity of home­buy­ers

De­vel­op­ers need to take a relook at the pric­ing, size and con­fig­u­ra­tion of res­i­den­tial units and the gover nment should take a proac­tive ini­tia­tive to de­velop pe­riph­eral lo­ca­tions with re­quired con­nec­tiv­ity and in­fra­struc­ture, says a re­port by Knight Frank In­dia ti­tled In­dia Real Es­tate.

An­other fac­tor that will help to stim­u­late the de­mand for house pur­chase is the re­duc­tion in home loan in­ter­est rates by banks. RBI has re­duced its pol­icy rate by 175 bps in the last two years and is likely to lower the pol­icy rates by an­other 25-50 bps in the next three to six months. Given the liq­uid­ity sit­u­a­tion, banks will have suf­fi­cient el­bow room to lower the home loan in­ter­est rate in the com­ing months.

ABHINAV SAHA

De­vel­op­ers need to take a relook at pric­ing and sizes of units to make hous­ing more af­ford­able.

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