Affordable Houses – Need of the day
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
housel flat costing Rs.75crore and there are people who cannot purchase ahouse/flat even costing Rs.5lakh 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 hereon.
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. umber 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 purchasehouses/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- 20 lakhs. This minimum cost is affordable only by the
middle class people. Then what about the poor class, who cannot afford to pay
15 lakhs? Will buying the house by such class of people could remain to be only
a dream?
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