KOLKATA: A special housing scheme for the middle class residing in rented houses, slums and unauthorised colonies will help revive sales of affordable homes that has taken a beating following hike in home loan interest rates and rise in home prices, key players of the real estate industry said on Thursday after Union finance minister Nirmala Sitharaman indicated during the budget speech that such a scheme was in the works.
Developers also said introduction of a targeted scheme for affordable segment homes would propel development in areas like Joka, Sonarpur and Rajarhat.
Among the metros, share of affordable segment homes in residential realty pie is the highest in Kolkata. With home loan interest rate going up 25-30% due to successive repo rate hikes by the apex bank last year and developers also increasing prices by 15-20% to factor in rise in input costs, EMIs had increased by 40%. While this did not impact sales of mid-size homes (501-1,000 sq ft) or large homes (above 1,000 sq ft), the dearer EMI had a debilitating impact on buyers of affordable homes (up to 500 sq ft), driving many potential customers to fence.
While the ratio of homes priced below Rs 50 lakh was 63% in 2019, it fell to 47% in 2023. This trend was also mirrored in the new project launches where the ratio of homes in this price band fell from 78% to 25%.
Developers told TOI a new scheme, targeting those in need of homes but unable to afford one, would have a major impact in Kolkata where maximum demand is for budget category homes.
“In Bengal and Kolkata, the residential market is driven by demand from middle-class customers in need of affordable homes. With affordability taking a hit with EMIs becoming dearer, this segment has been adversely impacted. If a new scheme addresses the affordability issue and leads to inclusion of those who have the ability to pay EMI but do not get bank loans as they are not in the formal sector, it will give the housing sector in Kolkata a huge boost,” said Siddharth Pansari, president of the Bengal chapter of Confederation of Real Estate Developers’ Association of India (Credai-Bengal).
“The proposed introduction of a new scheme aimed at assisting the middle-class in upgrading from sub-par housing and facilitating the purchase of new homes will address the housing needs of not only the lower-income strata but also the middle-income populace. This strategic move is anticipated to incentivize developers to initiate more projects in the affordable and mid-range categories. In conjunction with existing measures such as the 2% stamp duty rebate and the 10% rebate in circle rates aimed at supporting homebuyers, the new scheme is poised to significantly impact buying decisions,” remarked Knight Frank India chairman & managing director Shishir Baijal. Siddha Group MD Sanjay Jain, Jain Group MD Rishi Jain, Eden Realty MD Arya Sumant and Shristi Infrastructure Development Corporation CEO Sahil Saharia welcomed the announcement.
“By specifically targeting individuals in rented dwellings or informal settlements, government is recognizing the challenges faced by a substantial portion of the population,” said Saharia.
Merlin Group chairman Sushil Mohta also appreciated the introduction of schemes for the middle class to buy and build houses under PM Awaas Yojana.
