In its second term, the government could bring cheer to homebuyers
The NDA under PM Narendra Modi has got a resounding mandate from the voters and is back for a second term. In this article we take look at what that could mean for homebuyers.
The first major thing that matters to homebuyers is the price. According to Samantak Das, chief economist and executive director, research and REIS, JLL India, the price of residential real estate has remained stagnant in the last 5 years. While house prices in the top 6 or 7 cities have grown by 2-3 per cent per annum, and some locations have even shown a correction in prices, the average income has grown at 9-10 per cent per annum. “So houses are becoming affordable day by day and is not a chief deterrent in sales,” he said.
About 80 per cent homebuyers in India avail a loan to buy a house. Hence, it is important that the average Indian has confidence in economy and jobs in the medium to the short term, if they take the decision to buy a house. Under the previous NDA government, the economy had been through low phases, but the general sentiment as far as job continuity and economic growth remains positive, which means that more homebuyers should be confident of buying a house.
Another important factor to consider is RERA, the landmark reform that was introduced by the previous NDA government. The idea was to give homebuyers and developers a level playing field. RERA is meant to give homebuyers a lot of confidence as it assures transparency and timely delivery and the buyer is also assured of compensation in case the property delivery is delayed. However, RERA is a state subject and most states are lagging behind as far as RERA is concerned. “While some work has been done, all the state governments need to implement RERA in letter and spirit for the benefits of same to be fully felt,” confirmed Das. If the new Government sorts out these issues, homebuyers will benefit a lot.
While RERA has had its share of hiccups, housing sales have picked up recently “The impact was such that the first quarter of FY19 has seen a rise of more than 55 percent in housing sales. It is an indication of the trust that is coming back and hence a positive impact has started trickling in which will go a long way in transforming the real estate sector,” said Pradeep Aggarwal, Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM.
Last but not the least has been the Government’s thrust on affordable housing. “We expect the government to focus more on affordable housing as the mission is to deliver 'Housing for All by 2022'. There have been questions on the target of 2022 but we all have to understand that an overhaul in five years is not possible. We are sure that the target will definitely be achieved by the new government,” says Aggarwal. He adds that with the focus on affordable housing many schemes have been floated to help fill the demand gap. For example, Haryana has two policies -- Haryana Affordable Housing Policy and Deen Dayal Jan Awas Yojana. “More such schemes by the government are expected and if not a new scheme there might be improvements in these schemes to make sure the affordable houses are delivered to the target buyer,” he said.
Das said that the goal of affordable housing can be achieved, if the Government unlocks property for affordable housing, which would boost the sector and will help bring down the price of housing, especially in big cities.
A lot of factors determine interest rates, and inflation is one of them. The previous NDA government has done well to keep the inflation under control. “If inflation is kept in check we may expect interest rates to go down further and that will definitely help the homebuyer,” confirmed Das.
While it may be a little too early to come to a conclusion, but it can be said that there’s some good news in store for those who are looking to buy a house.