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Are affordable houses actually affordable?

Real estate is an ever fluctuating sector where experts are constantly trying to predict the future. Recently, people are realizing how the so called ‘affordable houses’ are doomed to stay ‘unaffordable’. There are a number of reasons for this, one of which is the subdued state of the real estate sector. The other reason is the poor state of infrastructure. Yet, there is an anticipation and hope of a revision in the prices. Even besides this notion, there has been a 10% growth in home loans. This growth is due to the balance transfer and offtake that was seen in the resale property sector. Another reason for this is the increased growth in Tier II and Tier III opposed to most major cities in the year of 2015.

In the current financial scenario, ICICI Bank home loans witnessed a 30% increase in Tier II and Tier III as opposed to 20% in Tier I. Experts believe that there has been a slowdown in the sector of sales and new launches. This has lead to a huge inventory stock in major cities such as Delhi and Mumbai. There were around 3.5 lakhs of units that were sold between October 2014 to October 2105, out of which only 41,000 units actually fell under the affordable housing range. There is no fixed definition of affordable housing and the price range is different according to the market. For example, it is 50 lakhs in Mumbai whereas, 30 lakhs in Chennai. Regardless of that, it has been asserted that the loan offtake in the first half of the financial year has been between the 50 lakhs to one crore category.

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