Government bodies in India are having a crucial, though sometimes overlooked, influence on the country’s expanding housing sector. Curious about India’s housing sector surge and how it is influenced? This article digs into the roles government programs and bodies play in driving this growth, plus we’ll highlight their perks for investors like you. Let’s start!
Government Initiatives Driving Housing Growth
Here is what you need to know about the influence of the government on the housing sector.
Pradhan Mantri Awas Yojana (PMAY)
One of the most impactful government programs is the Pradhan Mantri Awas Yojana (PMAY), launched in 2015 with the aim of providing affordable housing to all by 2022. Although the target year has passed, the scheme has been extended, showing how crucial it is in tackling the shortage of houses in India.
PMAY provides subsidies for home loans with an aim to reduce the financial burden on low-income families. As of 2024, the government has increased its allocation for affordable housing by 15% to ₹1 trillion ($12 billion). On the other hand, last year’s allocation for housing was ₹79,000 crore.
Infrastructure Development
The government’s efforts for infrastructure development also boost the housing market. By improving connectivity through projects like the Bharatmala and the Smart Cities Mission, remote areas become more accessible and attractive for residential projects. These initiatives have also played a very important role and have led to increased housing demand in Tier II and Tier III cities.
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Role of Banks and Housing Finance Companies (HFCs)
Banks and HFCs also play a crucial role in the housing sector by providing the necessary capital for home buyers. The government has incentivized these institutions through interest subsidies and priority sector lending mandates.
For instance, under the Credit Linked Subsidy Scheme (CLSS) of PMAY, borrowers can receive an interest subsidy of up to ₹2,67,000, making home loans more affordable.
Regulatory Support
The establishment of the Real Estate Regulatory Authority (RERA) has enhanced transparency and accountability in the housing sector. RERA ensures that developers adhere to project timelines and specifications, boosting buyer confidence and encouraging more investments in the housing market.
Increased Housing Supply
Government policies have led to a surge in housing supply. In 2023 alone, the launch of residential units across India’s top eight markets grew by 5%, with Mumbai leading the way. This increased supply helps stabilize property prices, making homeownership more attainable for you.
Demand Surge
Affordable housing initiatives and improved financing options have significantly boosted housing demand. The urban housing shortage, estimated to be over 1.5 million units, is expected to double by 2030, driving continuous demand for new housing projects. Additionally, rising income levels and urbanisation contribute to sustained demand growth.
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Conclusion
India’s government bodies are no doubt making a silent but significant contribution to the nation’s residential property boom. With initiatives such as PMAY, efforts to improve infrastructure, and help with regulations, they’re laying a sturdy foundation for a solid real estate market in India. This creates a strong platform for putting money into budget-friendly homes and REITs.
If you keep up with these government initiatives, you’ll be able to choose strategies and take advantage of new opportunities that come up. Happy investing!
