India's economy is growing and with it, is growing the need to provide housing for the vast population of this country. Housing remains the top priority for every Indian regardless of their income levels, education or any other possible factor. Unlike before, when the demand in real-estate was driven by investors majorly, now it's the 'end users' who are re-shaping the demand in the housing sector. A steep rise in migration to cities/towns, rural-urbanization and nuclearisation of families are the top reasons for this increased demand.
Through reforms like PMAY, CLSS, RERA and granting infrastructure industry status to affordable housing, the government has certainly given the much-required momentum to housing, but there is still a shortage of 2 crore housing units and an expected requirement of almost 6 crore units by 2022 coming mainly from LIG/MIG segment. In spite of these developments, real-estate is still struggling with some challenges like raising funds as investors are keen for commercial projects rather than residential projects due to the expectations of higher returns. Another major setback for the developers is that the end-users search for finished inventory as they don't want their investment to get stuck, resulting in the slow velocity of sales.
Budget 2019 would play a pivotal role in the grand dream of 'Housing for all by 2022'. Some expected reforms like easing ECB norm on lenders vintage, introduction of REITs & AIFs to build a finance environment, introduction of government initiated housing bonds to provide low rate funds to housing finance companies (HFCs). Allocating separate industry status to HFCs in the bank exposure will ease liquidity scenario. Steps like extension of Sec80-IBA until FY22 to promote affordable projects, tax-sops on green housing projects, housing corridors development akin & adjacent to industrial corridors, increased allocation of funds for infra development push in Tier-3 and smart cities, increased allocation to Amrut-Saubhgya-Ujjwala Yojna etc will certainly ensure the right push in the supply side of real-estate.
While on the demand side, steps like increasing overall limit of tax deduction on housing loans, reduction of GST to 5 per cent, MIG 1-2 CLSS extension to FY22, incremental sops on priority sector lending housing loans in Sec 24 & 80C, rationalisation of high registration cost, standardisation of property registration cost and process across India, introduction of tax-sops on an eco-friendly property purchase and its loan for green projects push are some of the measures which will help the consumer and the housing sector.
The writer is the CEO and MD, ART Housing Finance