At every conference, every seminar,
every meeting, eminent speakers from the Real Estate Industry and Housing
Finance Industry have been speaking about the affordable housing. It is a known
fact that the demand for residential housing is ever increasing, particularly
in the higher and lower income groups. Housing for the poor classes is always
an issue, which remains unsolved, since no one is interested in taking up the
housing projects for these people. Apart from the affluent class, middle class
(higher as well as lower) and poor class, there is one class that is people
below poverty line (BPL) which, it seems, has never been addressed. The demand
for houses for middle and poor class is said to be quite high, but the property
developers seem to be not very much interested in taking up any projects as the
profit margin will be comparatively low.
Affordability is a relative term. It
varies from people to people, even person to person. There are people who can
afford to have house flat costing Rs.75 crore and there are people who cannot
purchase a house/flat even costing Rs.5 lakh without raising a loan. They cannot
pay even the interest on such loans. Now-a-days the loan facilities are
available easily and people do try to have their own houses flats by raising
loans. Of course, people in the urban areas, particularly in major cities and
Metros, put themselves in 'search' mode and try to purchase a dwelling
accommodation affordable for them.
The property developers organize, through
their associations, periodically exhibitions, property Melas etc. in the major
cities for promoting their properties. To attract the NRIs, exhibitions and
melas are organized by the property developers in other countries, especially
in the middle east.
As we are talking about
affordability, who can afford is a matter that is perhaps decided by the
financial institutions who come forward to offer loans. The affordability is
determined on the basis of monthly income of the person, the job security of the
applicant, collateral securities available, number of years the applicant will
be in service before retirement, etc. Accordingly, the financial institutions
work out the amount that the applicant can afford to pay monthly and the period
for repayment of loan and interest here on.
The developers take up the housing
projects in various parts of the city. The projects are generally designed to
suit various classes of people. The higher class people have no problem of
affordability. Number of developed flats/houses/sites will be available in the
property market at the prices which may suit them. In most of the cases of this
category, the affordability is not a problem at all as they can buy the
property outright or through the financial institutions as they can raise loans
without any problem. They buy the property which they can afford easily without
any fuss about the EMIs.
Property developers are also more
interested in this class of buyers as the deals are finalized quickly. The
affordable housing, about which we are talking, is applicable to the lower
middle class and poor people as they are the main buyers. These people will be
planning to purchase houses, flats with the help of financial assistance from
the banks and other financial institutions. In view of the high cost of
construction, the minimum cost of flats, as we see from the offers made by the
developers through the media, is above 15- 20lakhs. This minimum cost is
affordable only by the middle class people.
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