‘Housing for All’ is the big ambition of the present government, which recently became a close realty post the budget announcement in February this year. The affordable housing segment got an official ‘infrastructure’ status. The declining fortune of real estate sector is finally going to get some respite from ‘bulk’ selling of housing units.
by MythBuster Pooja,
It will draw the realty sector close to a segment, which has so far been ignored, as HIG flats or luxury apartments is where the real money is. Project developers have so far focused on metros and mini-metros, commanding price, in a monopolistic way. It is no hidden fact that there indeed was a time when the demand for buying homes was greater than the supply. In the past few years, the dust began to settle. To put it in perspective, now the situation is favorable for buyers than the sellers.
So, affordable housing can be viewed as- government intervention at the right time.
Talking from the buyer perspective, more people are now expected to buy permanent homes. And, this growth in the number of buyers is going to be much diversified. The whole real estate eco-system is jolted, and with construction costs, loan costs, expected to come down, buyers across India are expected to benefit from the reality sector growth. Affordable housing represents the set of lower or middle-class income households. It is not the same money game for real estate players now. It is still about pocketing big money as this ‘chapter of real estate’ is going to be a volume game. Big players will reach small towns in India, and attempt bulk selling.
Initially, the same companies were hesitant because of high costs they had to incur to build a house. With the government providing them easy access to funds, this problem seems to have been sorted.
However, the challenge is huge for real estate project developers to tap the market. Do you know why?
It is because of the typical characteristics of a home buyer especially the affordable segment. Please understand that these are the same people who have limited resources of living, and presumably, dependent on their savings or long-term investments. When they are considering an option worth to buy, they are expected to be very finicky in spending money. Considering the fact that they are going to invest their lifetime savings into buying a home, it is not an easy task to sell them. Project developers will have to spend a lot of time thinking on convincing them, and persuading them to buy their property. It requires a completely different on-ground approach.
So, what is the reality of affordable housing in India?
The household income is of prime importance here. Affordability means different to different people, and it is not just subjective but based on the single fact of- total income of a household. India has an emerging middle-class population, an existing base of middle-class income households which form around 50% of the total population, and lower-income households too. Each segment has to be catered differently, without really compromising on quality, as these are finicky people. Even a crack in the window will make them apprehensive of investment.
The same rule of benefit of location, home site, advantage of good connectivity, may or may not apply. But, the size of the house will. What is large will sell the most. Affordability is a subjective term, and will be considered differently by different sections. However, the affordable housing segment has received a sound support from the government, and the ultimate objective, to make housing all-inclusive, is a definitely a game-changer.