Demand for Affordable Housing Segment Would Rebound Back Post Crisis

Real estate is a very important asset class, with market and stock price uncertainty. It's more and more valuable. The momentum of affordable housing will accelerate after the announcement of the RBI, as it injects liquidity in the market. During this time, salaried workers have a hard time paying rent, which drives up affordable housing demand. As more and more people post lockdowns on their regular income jobs, they consider buying their own home. The bank's recent announcement of mortgage rate cuts will also boost the affordable housing sector.

Recommendations for Housing for All and Buyers and Developers have seen many affordable housing projects emerge. Now, the fear was that the limited income and unemployment after COVID-19 would hurt the sale of affordable homes where buyers postpone home purchases. However, we anticipate significant activity in the affordable middle-income housing segment. This end-user driven segments are expected to remain resistant to most price corrections. It is primarily because of the recognition that it is important to own a home. The class also faced the difficulties of dealing with rents during the blockade and having to stay in an empty, unsecured area. There is always demand in this segment, and after COVID-19, the fence-sitter is now buying, which will increase the manifold.

The number of inquiries increased by 20% due to people spending a lot of time locking down in a tragic scenario of low site access. Demand will also be driven by government bailouts. Lowering repo interest rates makes mortgages more affordable. Similarly, by repeatedly lowering the reverse repo interest rate, the funds are not stored in the bank but floated in the system, injecting liquidity. The government has also pledged to recapitalize NBFC, along with allocating NOK 10,000 to the National Housing Bank (NHB). This will ensure a smooth flow of capital to HFC and increase credit support to developers. This is one of the very necessary steps.

Realtors have already begun plans to deliver as quickly as possible to meet growing demand. Technologies such as Aluminium Foam Works Technology can help. Concrete walls are used instead of brick walls, helping to reduce construction time. This technology helps in fast-paced construction as projects are completed faster than expected. Affordable segments should look to such technologies in order to complete the project as quickly as possible without having to wait too long for the buyer.

The affordable housing sector will get the necessary impetus if the government introduces an immediate release of funds according to budget allocations. This sector enjoys the status of infrastructure. In addition to that, the single window clearance system helps maintain momentum. Since the last few years, the sector has fought uncertainty and challenges. As before, the sector has shown resilience and has successfully absorbed many shockwaves such as RERA, demonization, GST implementation, and the NBFC crisis. Once again, this sector has a much smaller risk of escalation and a stronger emergence.

In conclusion, injecting liquidity into the market is paramount and the latest announcement will help the economy. This time RBI has also adapted to the real estate sector. This clearly shows that the government understands the importance of the second largest employer in India. The introduction of 50% GST reductions in one year for all boards will further help the country's entire economic structure to quickly get out of this challenge.

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Created on Jul 15th 2020 07:58. Viewed 459 times.

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