Money & Banking

Incentivise supply of affordable housing, says Gruh Finance MD

Rutam Vora Ahmedabad | Updated on January 12, 2018 Published on January 16, 2017

Sudhin Choksey

Expects demand for real estate to pick up only after April 2018

Despite a series of rate-cut announcements by public and private sector lenders after Prime Minister Narendra Modi’s push for affordable housing, home loan growth may continue to face critical challenges amid lack of incentives to create adequate supply.

On New Year eve, the Prime Minister announced doubling of the loan amount that can qualify for interest benefit under the Pradhan Mantri Awas Yojana (PMAY) for urban areas.

Terming the announcement as a measure to fix the demand side for affordable housing, Gruh Finance highlighted the equal and pressing need to announce incentives for developers to create supply in the affordable segment.

“The real estate sector has been going through pain for the past four years. The registration of properties and transactions has dipped 30-40 per cent in different pockets. There is a glut in the high end of the market and not in the low end.

“The affordable segment has remained highly neglected. Hence, people in the low and mid segments were not able to find properties at affordable rates as there is no supply,” said Sudhin Choksey, Managing Director, Gruh Finance.

“Even if the low-income group wants to stretch a little and get into the mid segment, the prices are unaffordable. Therefore, incentivise developers in some form, specifically for the affordable housing segment,” added Choksey.

In the current housing loan market, even if the rates come down and demand is created, lack of supply could render the interest subsidy scheme ineffective.

“There is no lacuna in the scheme,” Choksey said, but added that there is no adequate supply to make the scheme successful.

Post-demonetisation, the demand for real estate, he said, is unlikely to pick up before April 2018.

Gruh Finance has reported a net profit of ₹186.20 crore for the third quarter, up 20 per cent from the ₹155.76 recorded in the same quarter last year.

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Published on January 16, 2017
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