@ Vikas Sharma | Sr Journalist
The year 2020 is likely to witness the revival of the housing sector growth led by major fiscal infusion proposed by the government, says Reliance Home Finance executive director and CEO Ravindra Sudhalkar.
Sudhalkar believes that the spillover effects of the fiscal package announced by the government last year are likely to be felt this year in a positive way, ultimately catalysing the housing sector’s growth.
He also noted that “with inflation under rein and interest rates on home loans currently at a 15-year low, it is safe to assume that this may be the ideal time for home buyers to invest in their own properties,” he added.
The country’s real estate sector has been reeling under a severe liquidity crunch. However, things have taken a turn for the better with the government taking an important step to infuse liquidity into the sector.
“The year 2020 has begun on a positive footing for India’s real estate sector, especially for home buyers. Last year the government and policymakers announced several initiatives for reviving the housing sector growth. Both home buyers and builders are likely to reap the benefits of these revival measures this year,” Sudhalkar said.
“The government’s measures to recapitalise banks, urging them to buy loan pools of (Housing Finance Companies) HFCs and NFCs, revising securitization guidelines, infusing liquidity through NHB, setting up the Rs 30,000 crore affordable Housing Fund, all helped in restarting the funding flows for the sector, and this is likely to gather a quicker pace this year,” he added.
Relaxation in extra commercial borrowing (ECB) norms, among others, has also helped bail out real estate developers.
According to Sudhalkar, government’s announcement at the end of 2019 to establish a Rs 25,000 crore stress fund to finance about 1,600 stalled projects to restart construction activity have generated optimism among home buyers.
Government also provided support to home buyers through reduction of GST for housing and increased tax exemptions on home loans.
Since the IL&FS fiasco in 2018, lack of financing was the biggest challenge for India’s housing sector. Non-banking finance companies (NBFCs) and HFCs till then were the biggest source for funding for the real estate sector. However, with the banks and mutual funds turning off their taps for NBFCs and HFCs, this financing channel had begun to run dry.
