Subsidy Scheme for housing for lower income groups should have been continued: HDFC’s Parekh

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Deepak Parekh, Chairman, HDFCAl said Credit Linked Support System (CLSS) for low income groups It should have continued for a few more years given the housing shortage in the country.

“The government’s housing subsidies, particularly through the Pradhan Manti Awas Yojana Scheme and Credit Linked Support System, or CLSS, which ended last year, have been a game-changer, especially for the economically weaker sections and lower-income groups.

Parekh said at a real estate conference organized by a media group.

Duty on concessional terms

The HDFC president noted that even the concessional stamp duty rates introduced by some states during the pandemic have given a boost to the housing sector. He added that this shows that some perks go a long way in helping to improve the affordability of homes.

“The withdrawal of CLSS and concessional stamp duty in some states, in conjunction with uncertainty about the interest rate path, may have had some mitigating effect on housing, particularly for lower income brackets.

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“I also believe that definitions of economically weaker sections and lower-income groups or even loan amounts and property used to qualify for priority sector housing loans need to be periodically revised to reflect changing market realities,” he said.

Parekh stressed that the Indian real estate market needs a lot of affordable and middle-income housing. “Recently, there has been a greater proportion of the growing stock of housing towards the upper and luxury sectors. Time and time again, many developers tend to build without properly assessing where the real demand is.

The demand for affordable housing is huge. Affordable housing projects in the right location and price points may have lower margins, but sales velocity and cash flows are much faster.”

With the government’s focus on making India a global manufacturing hub and with the development of industrial corridors, Parekh ensured that real estate development opportunities had increased in a variety of ways.

He added that there is a growing demand for new real estate assets such as warehouses, fulfillment centers, data centers, hospitality and lab offices, among others expanding in second and third tier cities and beyond.