Mumbai: "Housing for All by 2022" can not be realised unless the issues facing the housing sector — like liquidity, high GST rates on cement and other construction material, high stamp duty and other taxes levied while purchasing a house, passing on benefit of lower interest rates by banks and housing finance companies — are addressed in the upcoming Union Budget.
Genuine consumers are not able to buy houses due to soaring prices while speculators have booked a majority of the developers houses/flats in prestigious projects, which has led to price bubble forming in the housing sector at a time when housing finance companies and house developers are facing liquidity crunch.
As a result some big players have started exiting the housing sector. Indiabulls Real Estate and Tata Housing are exiting the housing development business. Housing financiers like Indiabulls Housing Finance and Dewan Housing Finance are facing liquidity crunch.
The Union Budget needs to address the housing sector's issues, as housing finance companies are facing challenging times.
Deo Shankar Tripathi, Managing Director and CEO — Aadhar Housing Finance said,
"The foremost priority should be to address the liquidity scenario of the HFCs and NBFCs, particularly the smaller NBFCs and HFCs who are largely dependent on the banking system. Insolvency issues and liquidity should not intermix and be dealt separately and liquidity is the top priority to give boost to affordable housing."
"Let whatever regulatory controls like Asset Liability Management, Leverage, Risk Management etc, the RBI wants to bring in to enforce governance and systemic issues, be implemented, but till then liquidity should made available to NBFCs and HFCs. Banks should be advised to provide funding to all well functional HFCs and NBFCs with investment ratings, at reasonable rates, as they were doing prior to September 2018," Tripathi said.
Many housing sector experts feel interest rate cuts have not worked and this needs to be addressed.
Nilyanka Bhushan, Managing Partner and Co-Founder, Sigma Ventures which operates as a Sebi approved Alternative Investment Fund said, "With the residential real estate sector in doldrums and near jobless growth, government needs to put into place measures to revive the troubled housing market. Purely lowering interest rates might not work. Long term resolution of the liquidity crisis in NBFCs will also need to be addressed. As the revival of real-estate is a must for employment, it will be very important to look at what the government proposes in the budget."
Anuj Puri, Chairman, Anarock Property Consultants said, "Housing for All by 2022' seemed highly ambitious — indeed, over-ambitious — though doubtlessly noble in intent. With just three years remaining for meeting this intended target, the task ahead is daunting but perhaps doable with concerted political will — if not by 2022, then at least by the culmination of the Modi Government's new five-year term," Puri said
GST rate for cement and other construction material need to be brought down and benefit passed on to home buyers for bringing down cost of the affordable housing schemes.
