Scheme Offers Hope for Small Homes on Kolkata Outskirts

Real estate industry leaders stated that a special housing scheme aimed at the middle class, including those living in rented houses, slums, and unauthorized colonies, could help boost sales of affordable homes. This comes after Union finance minister Nirmala Sitharaman hinted at the scheme during the budget speech, as home loan interest rates have risen and home prices have increased, impacting sales negatively. Developers also mentioned that the introduction of a specific scheme for affordable homes would drive growth in areas such as Joka, Sonarpur, and Rajarhat.

Among the metros, share of affordable segment homes in residential realty pie is the highest in Kolkata. With home loan interest rate going up 25-30% due to successive repo rate hikes by the apex bank last year and developers also increasing prices by 15-20% to factor in rise in input costs, EMIs had increased by 40%. While this did not impact sales of mid-size homes (501-1,000 sq ft) or large homes (above 1,000 sq ft), the dearer EMI had a debilitating impact on buyers of affordable homes (up to 500 sq ft), driving many potential customers to fence.

While the ratio of homes priced below Rs 50 lakh was 63% in 2019, it fell to 47% in 2023. This trend was also mirrored in the new project launches where the ratio of homes in this price band fell from 78% to 25%.

“In Bengal and Kolkata, the demand for affordable homes is primarily driven by the middle-class. However, with the rise in EMIs affecting affordability, this segment has been negatively impacted. If a new scheme can address this issue and include those who have the capacity to make EMI payments but do not qualify for bank loans due to being outside the formal sector, it would greatly benefit the housing sector in Kolkata,” Said president of the Bengal chapter of Confederation of Real Estate Developers’ Association of India (Credai-Bengal).

“The proposed introduction of a new scheme to help the middle-class upgrade from inadequate housing and purchase new homes is expected to address the housing needs of both lower-income and middle-income individuals. This strategic move is likely to encourage developers to embark on more projects in the affordable and mid-range categories. Alongside existing measures like the 2% stamp duty rebate and the 10% circle rate rebate for homebuyers, the new scheme is expected to have a significant impact on purchasing decisions,” Said remarked Knight Frank India chairman & managing director.

By LNN (Liyaans News Network)