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.75crore and
there are people who cannot purchase a house/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 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- 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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