New opportunities for the developers in offing as home ownership is low in urban middle class
A latest research christened ‘IMGC Home Hunt 1.1’ by India Mortgage Guarantee Corporation (IMGC) has highlighted that home ownership among the urban middle class in India seems to be low at present. The research is aimed, to provide unique insights into the attitudes, needs and concerns of the Indian home buyers. It has been undertaken in conjunction with Kantar IMRB across 14 cities (metros, mini metros and small towns).
According to the research, high interest rates and property prices, among other elements are acting as the major deterrents for people in buying homes. The key findings of the IMGC Home Hunt 1.1 research revealed that only 32% of the respondents live in self-purchased homes and 56% do not wish to buy a house in the near future. The top four reasons indicated by respondents include high interest rates (38%), lack of savings and unwillingness to borrow (38%), high property rates (32%) and insufficient loan availability (32%).
India’s first Mortgage Guarantee Company, India Mortgage Guarantee Corporation (IMGC) is a joint venture that combines the developmental mandate of National Housing Bank (NHB), the technical expertise of Genworth Financial, and the resources of International Finance Corporation (IFC) & Asian Development Bank (ADB).
Sriram Kalyanaraman, MD & CEO, National Housing Bank said, “The housing sector in India is poised for a higher growth, especially in the affordable housing segment by the Housing for All by 2022 Mission and the Infrastructure status accorded by the Government of India, apart from various others measures.”
“In the last couple of years, there have been a number of positive developments to boost home ownership levels in India whether it is through regulation of the real estate sector, providing incentives to the builders, or introduction of schemes such as Housing for All. However, the Indian home buyers still face significant challenges in pursuing their dream home owing to both financial constraints stemming from both personal and external factors,” added Amitava Mehra, CEO, India Mortgage Guarantee Corporation (IMGC).
Interestingly, buying a house as an investment option is still the reason for almost half of the survey respondents (both intenders and recent buyers). The top reasons for buying a house include ‘long-term security’ (64%) and ‘pride of ownership’ (59%).
“The decision for buying a home is considered as one of the largest financial decisions for the potential homebuyers. Unlike many other purchases that decrease in value, a home is an investment that appreciates over time,” said Arjunpreet Singh Sahni, Executive Director, Solitairian Group.
“Owning a home is like having a space that is truly yours and the most important reason why homeownership has emerged as the most influential factors for the homebuyers is that it provides long term financial security,” added Pankaj Kumar Jain, Director, KW Group.
The data from the IMGC Home Hunt 1.1 research also indicates that 2 in 3 respondents view home loans as a way to avail tax benefits which demonstrate an open mind towards borrowing. However, only one in five respondents seeks a Loan To Value (LTV) beyond 70% indicating Indian home buyer’s conservative approach towards debt.
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