Filters needed for buyers of affordable housing….Devesh Chandra Srivastava and Deepti Bhaskaran
R V Verma Chairman, National Housing Bank
There is no data available on housing price movement in In- dia. Residex, too, started in 2007. Where should one look for authentic data?
Before 2003-04, only housing finance companies (HFCs) were active in terms of credit flow. When banks came in, credit con- sumption went up. HFCs cover 35% of the market and the re- maining by banks. The demand for housing finance is huge.
If you look for Residex before 2007, it is difficult. But we have to relate it with fund flow that start- ed around 2003-04. We are look- ing at how the financial sector has interacted with the housing sector. Residex is just one mea- sure of price movement that gives confidence to all stake- holders in financing–lenders, borrowers, regulators and build- ers. We have moved to quarterly data that will give a more accu- rate picture of price movements.
What are the problems you face in data collection?
It is difficult to get data from the registrar’s office. As a proxy, we get this data and know the details of properties against which a loan has been also our sources. We also have a tie-up with the National As- sociation of Realtors. But we haven’t started sourcing the data from them actively.
National Housing Bank (NHB) is active on the afford- able housing front? How do you define affordable housing?
It should be up to `15 lakh. There is priority sector lend- ing, which NHB also follows.For a metro city, it could be `20 lakh, but for a tier II and III city, `10-12 lakh. But we are looking at a population with a monthly income of `20,000. We are looking at market- based solutions, not subsidy- based. A person with this sala- ry can afford a `10 lakh loan.
Affordable housing comes at the cost of location, quality of construction and infrastruc- ture around it. Comment.
Having defined affordable housing as I did is one aspect. But we are defining affordability in terms of areas where funds have not been able to reach. We try to bring affordability based on the price that a buyer can af- ford given that there is a loan available based on his income. We see affordability in terms of the acquisition cost and define it from the policy perspective. Once that is converted into the price of the unit, area becomes important. Then we focus on the market where there is demand.
Then a construction agency has to come in. We try to sensitize all stakeholders–construction, ar- chitecture and design firms and HFCs to bring lending and devel- opment in a particular price band. We also address their prof- itability. Then the private sector will see some profitability to move into this segment.
Then a construction agency has to come in. We try to sensitize all stakeholders–construction, ar- chitecture and design firms and HFCs to bring lending and devel- opment in a particular price band. We also address their prof- itability. Then the private sector will see some profitability to move into this segment.
As you said the basis of the allotment of a unit should be a person’s income. But if a pri- vate builder is developing af- fordable housing, the allotment is open for everyone.
It should be more supply driv- en. If the builder has got the land at an affordable cost, let him take the responsibility of al- lotment. If a government agency is involved, there are regula- tions. But if the private sector is involved, they should check if the person is able to buy and get a loan. The agency will build flats according to the buyers.
The specification of units (will f also depend on buyers).
The specification of units (will f also depend on buyers).
What if the scheme comes in a posh locality? Then, anyone s will be willing to pay more.
We should defeat the purpose . of investor community. It is im- s portant that these houses are l consumed by the right kind of – people. However, there will be certain amount of investor activ- – ity. Creating a filter is important. It is important to undertake a – trend analysis–how many peo- r ple bought the units and after how many years they sold it?
Another reform was the launch of the reverse mortgage scheme, which didn’t take off. – The reverse mortgage loan-en- – abled annuity scheme is a t shade better but apart from the Central Bank of India, no other – bank is offering it. Why?
The payout of annuity- t linked reverse mortgage is tax- – able, while that under regular y reverse mortgage is exempt. We have taken the issue with s the finance ministry. That clar- f ification will generate confi- t dence among beneficiaries.
Devesh Chandra Srivastava . and Deepti Bhaskaran l devesh@livemint.com