Affordable Housing: A Real Opportunity

Author: Atone Place

Author: Atone Place

Affordable housing is the latest catchphrase for real estate sector which has been struggling with a steep downturn in demand. But many close observers of the real estate business say that what lies behind the facade is not the real deal. For the past few years, the dream of millions of middle class Indians to be a proud owner of their own sweet home remained just a fantasy as the rising prices and developers keenness to focus on elite gated communities made them walk of the market. But that market trend could be about to change. More and more middle-class Indians can expect to get a step on the housing ladder in the year 2009 due to the cuts in the bank loan rates and distressed developers, chastened by the property market slump due to recession, have decided to decrease prices to move unsold units in their projects and construct cheaper homes. During the past of couple years houses have become just another financial asset, as brokers and wealthy investors, buoyed by surging stock market earnings, trooped into the real estate sector in the blind faith that the only direction that prices will go was upwards. The markets saw that their faith was even rewarded, and prices went up to surreal levels. Developers were happy to see the way the markets for real estate was growing, and many of them aimed to construct high-margin exclusive projects, almost oblivious to the fact that such projects and properties were beyond the reach of the majority of middle class Indians. High prices along with double-digit interest rates had put the genuine buyers and middle class Indians on the back put. But since the last quarter of the year 2008, realty started meeting with reality. And the collapse experienced by the stock market turned all the cards for the market speculators, and with them, the real estate industry. Most of the developers now opine that the affordable or relatively lower lower-priced homes are the solution to fight the current mess. In this mess also lies the solution to the misery of the developers. Many developers including the big players of the real estate sector are rediscovering a basic fact: the bread-and-butter of the real estate sector in India comprises of simple, affordable houses bought with bank home loans at reasonable interest rates. According to the Indian governments data, there is a demand for new homes but pricing has been a big problem for buyers. The market analysts observed that price correction is the only way to revive the realty market. The recent rush for the low cost houses offered by the Government development authorities, shows that buyers always looking for low-cost houses remains huge. Developers have to lowered prices of their projects as they want to capitalize on it. And this has been supported by the banking sector also. Several state-run banks & private banks have slashed the interest rates to single-digit levels for housing loans up to Rs. 20 lakhs, albeit after being nudged by the Indian government which views sentiment in the housing sector as a bellwether for the Indian economy and hopes to revive the sector again. The developers stated that the package announced by the Indian government has helped in triggering the sales in the affordable housing division in almost throughout the country. The impact of these actions is not just limited to the smaller cities but developers are launching affordable homes in bigger centers too. According to the developers, the price correction is a move that has been dictated by the market. Construction organizations cant construct homes as per their whims and fancies. They have to build homes for customers and if there is a demand for affordable housing sector then they have to design and launch more projects for the segment. Meanwhile, price corrections in the Indian real estate sector have been quite stark. Prices for luxury homes have been corrected by almost 30-40%, while projects that were priced around 50 lakh are now available at a cheaper rate which is almost 10-15% below the earlier price. Analysts feel that the prices still will drop by another 20-25% for customers to walk in. One reason holding back customers could be the hope that prices will drop further but the developers disagree. According to the developers, the housing market has already scraped its rock bottom. And it is a fact for buyers to accept this.About the Author:

Atoneplace is leading Real Estate India offering best Properties Video including Commercial Property India, Residential Property India.

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