In India, demand for housing to stay
You can count on continued strong demand for housing in India according to the National Housing Bank. For one, the market is flooded with liquidity thanks to a healthy economic growth rate, tax concessions and relatively low interest rates. Secondly, not only have realty funds made an entry for the first time, they now have about $4.7 billion chasing property investments. In addition to this there is a housing shortage estimated at 31.1 million units, especially in rural India.
Property prices in metros like Mumbai, Delhi, Bangalore, Kolkata and Chennai are rising at 30-40% a year. However, there may be a downward adjustment in property prices in the short term. But prices of housing in smaller cities will continue to grow due to existing shortages. There is also an overall increase in demand for office space, shopping malls and residences across the country.
National Housing Bank is also spearheading an important project - Productive Housing in Rural Areas (PHRA) - to provide rural home loans in partnership with an NGO called the Dhan Foundation. Such loans could have a multiplier impact on the rural economy by creating productive assets. Today, less than 15% of total loan disbursements flow to rural areas and NHB would like to see that number increase.
In a move to help benchmark prices and inform investors and consumers alike, the NHB is planning to establish a residential real estate price index for five major cities by the end of the year. The NHB is also planning to introduce reverse mortgages where homeowners above 62 years can receive monthly cheques against the value of their homes.
By INRnews Correspondent
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