New Delhi: High housing loan interests and reluctance to borrow are dissuading Indian buyers who have to dig into savings to own a house, a study has revealed.
There is significant demand for affordable housing amongst the younger age (25-44 years) in smaller towns than in metros and mini-metros, the study conducted by India Mortgage Guarantee Corporation (IMGC)-Kantar IMRB showed.
"Housing sector is poised for a higher growth, especially in affordable housing segment by the Housing-for-all by 2022 Mission and infrastructure status accorded by government, apart from various other measures," Sriram Kalyanraman, MD&CEO, National Housing Bank said at the launch of the report.
Around 38 per cent respondents said that interest rates are too high while equal number of respondents cited lack of savings and unwillingness to borrow as constraints to own a house.
Higher property rates (32 per cent) and insufficient loan availability (32 per cent) are among other factors deterring home buying plans.
"High dependence on personal savings to pay down payment for first-time home buyers also delaying home ownership," the report said.
Asked about progress on Housing-for-all, Kalyan said a lot of private developers have launched projects under affordable housing apart from government lending and loan subsidies.
"The full data has to come from private sector. Once we take it, I think we will surely be in line with Housing-for-all by 2022," he said.
He said there is a lot of aspiration in terms of demand for small-sized houses of about 500 square feet presently.
With demonetisation, it seems property prices are coming down because alternative currency has gone out, he said.
"So prices are bound to come down. It has also helped a lot of customers, there is more transparency to buy houses in Rs 15-20 lakh segment," he added.
The report says that almost half of millennials (46 per cent) in India live with parents, than in rented (31 per cent) and self owned homes, reflecting their financial dependence.
"There is a gap in the market. These can be managed to a large extent by mortgage guarantee backed loans. With availability of higher loan to value (LTV), Indian home buyers can achieve their home buying dream by not relying solely on personal savings," Amitava Mehra, IMGC CEO said.
The survey was conducted in two phases with a sample size of about 4,100 respondents from metros, mini metros and towns who have either home loans or have applied for it. They were divided into 25-34, 35-44 and 45-55 years age groups.