An overall of 10 million PMAY units need to be delivered by end of 2020, hence making affordable homes a dominant segment in the coming years.
There was huge demand for the mid segment and luxury homes in Bangalore before. But of late, the affordable segment has overtaken this trend and has become the center of focus in the real estate sector. Also, more and more renowned real estate investors are entering into the affordable housing segment as the demand for low-priced homes is on the upward push.
In fact, there are a number of factors that make affordable housing the future of real estate investment in India. The most essential factor being that the Government of India itself has initiated affordable housing plans.
Great emphasis has been laid on the affordable housing section as around 1.5 crore affordable houses were constructed in the last five years under the Pradhan Mantri Awas Yojna (PMAY), and 1.95 crore houses are being similarly built as part of Phase-II. To further aid the demand in the residential market, the Finance Minister additionally introduced extra deduction of up to Rs 1.5 lakh for interest paid on housing loans borrowed until March 31, 2020 for purchase of affordable housing.
The FM also recently announced an Alternative Investment Fund (AIF) of Rs 25,000 for the stalled Affordable and Middle Income houses. More importantly, numerous NPA tasks and ones facing bankruptcy proceedings below NCLT shall additionally be included. This move will consist of greater stalled projects into the eligibility standards and offer relief to already aggrieved homebuyers. These steps will now not only benefit the homebuyers but also help the affordable housing sector.
A big chunk of homebuyers have shifted their focus on affordable housing, as making an investment in premier units does not appear secure in the present scenario. Apart from the tasks taken by the government to enhance the affordable housing sector, another crucial factor which will increase the call for affordable housing is India’s population. As we know, India is the second largest country in terms of population and a major part of the populace belongs to the low and middle class income group and all of them aspire to buy a home in a bigger city like Bangalore where best affordable housing is found.
So, looking at their budget, the call for affordable housing will continue to be robust in the coming times. According to a current report, a total of 10 million PMAY units must be introduced by 2020, making affordable housing a dominant section in the coming years.
Premium homes in Tier-1 cities have emerged as unaffordable, therefore increasing the demand for affordable housing. Also, reports claim that there will be a significant rise in the urban population, which is expected to grow to 590 million by 2030 at a CAGR of 2.4% between 2010 and 2030. This has called for more and more builders to come up with affordable housing projects.
All the above mentioned factors are giving a lift to the affordable housing market. Thus, the future of affordable housing appears very promising and we anticipate it to revive the ailing real estate property in the coming years.