By Accommodation Times News Services
Confederation of Real Estate Developers’ Association of India (CREDAI) has requested Reserve Bank of India to relax bank lending norms to help real estate contribute more to the GDP and meet the goal of providing housing for all in the country.
During a meeting with RBI governor Raghuram Rajan in Mumbai on Tuesday, Credai office-bearers led by its president Getamber Anand and president-elect Jaxay Shah said real estate in India accounts for only 6% of the GDP and has a long way to go before reaching maturity. Also, to overcome the government-estimated housing shortage of 18.78 million homes, the real estate sector has to grow about 10 times its current level.
The much debated real estate bubble and oversupply of houses are not really problems for India as the country is far below the level of developed countries in creation of housing stock. Hence, housing needs a supporting financial architecture and not a restrictive one, they said.
Developers have suggested that the limits for priority lending in the housing sector be increased from 28 lakh to 50 lakh in metros, where the price of housing is high. Suggestions include making private sector eligible for slum rehabilitation loans, providing priority sector status to loans given to affordable housing projects and treating real estate as an infrastructure sector.
They also suggested banks should come forward to fund land purchase as was the case till 2006, as recently mentioned by Deepak Parekh, HDFC, he believes that this will lower the cost of land and credai agrees with Deepak Parekh’s suggestion.
Since last two years India’s real estate market has witnessed one of the longest slowdown. Slow home sales, rising inventory and long delays in completing projects for lack of funds have pulled down the country’s property market.