With the increase in the demand of houses due to increased urbanization, the term affordable housing has become quite a relevant concept today, where properties as low as Rs 8 Lakh are being provided to low and middle income groups. However this initiative can only be taken by the state government who are in a better position to finance the costs of constructing house.
For the private sector, there seems no room available for them to operate since the cost of acquiring the ground and construction will spiral costs out of control. Only for those private sector firms who wish construct properties outside the city seem to be in a better off position. , The taxes come to between 30 and 40 per cent of the total cost of a project. Some subsidies for such projects will help in catering to the needs of this market.
With the increasing demand of houses, currently estimating to be around 25million in urban areas, there seems to be a likely increase in the demand of a home loan market as well. Since, the increase int eh prices of rental apartments is increasing by the day, many Indians feel the need of purchasing a property of their own. So these kind of affordable properties are basically targeted for the household group earning Rs20000 a month.
Along with the tax benefit and one per cent interest subvention, a home at Rs 8 lakhs is affordable. In a growing city like Bangalore , the rental values will keep increasing as development gains ground.
So economists have predicted that there can be stability in the rising interest rates for quite some time since the demand for loan in this sector is likely to increase in the coming future.