Affordable housing is great. Why is the Euphoria now ? Because PMAY incentive of 3000 crs.
My Qs is will it be enough to sustain the euphoria ? Ultimately we need end consumers to buy this. Are the end consumers solvent enough to ride this euphoria ?
Is 3000 crs enough to support this euphoria ?
There is an article in today’s Business Standard that also support that Yes, there is an euphoria and a significant number of players want to enter this market
National Housing Bank (NHB), the apex financial institution for the segment, has got six applications in the past six months from entities for starting a new housing finance company. Those applying include the Piramal Group, JM Financial and Hero Group. This is in addition to 11 approvals that it gave in the past 12 months.
One more it received last year is under consideration. What is interestingly is that most of these newcomers are targeting home loans of Rs 10-15 lakh. Clearly indicating an impending boom in the affordable housing segment.
“New entrants are clearly excited by the government addressing the supply and demand-side constraints,” says Sudhin Choksey, MD, Gruh Finance. Affordable housing has been a part of the ruling Bharatiya Janata Party’s election manifesto. The rise in new HFCs started with the government coming to power three years ago. About 30 new ones have come in this period, taking the total number to 85. “These new entrants are also making a natural progression to an HFC from an NBFC (non-bank finance company), seeing a larger opportunity,” says Choksey.
The progress in implementing PMAY has been limited so far. However, the pace has started to pick up. NHB has signed memoranda of association with 34 states and Union Territories; at least 700,000 housing units have been sanctioned across states. The infrastructure status awarded to affordable housing in this year’s Union Budget is likely to support supply creation.
“The rush for opening of HFCs indicate the impending boom in affordable housing,” says Sriram Mahadevan, business head at Happinest, the affordable housing project from Mahindra Lifespaces. “To see the real surge under PMAY, one will have to wait till the year end.” Mahadevan himself is waiting for approval to launch a project at Palghar that will have a majority of houses under Rs 20 lakh each. “”
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