This is one of the best time for people to buy a house because of several reasons, first of all, the interests rates are relatively low, most states have done something to help people buy a house in the expectation that a boost in the housing sector will effectively give a boost in the core sectors in the economy, cementing and every other that is involved with this. \
The next one is that housing creates a vast number of jobs, e.g. in Maharashtra, the employment rate has been reduced from 5% to 2%. The third one is that if a customer works at this time, then definitely that person is highly interested. Therefore, a discount of 3% is given to that person. Thus, the combination of these has made housing more affordable today; then it has been for a very very long period.
Also, if we look back in time, then the past four years, the property has not risen they have gradually come down; therefore, it is best to buy a house now.
The demand has increased with every passing month. Since June the hypes came into this, June was better than May and July was better than June, and so on. Talking about September individually then in this month the individual loan disbursements has been 11%, i.e. higher than September-2019. October has been more than 30% higher than the previous year. Now if we compare the growth rate to prior years, then certainly it has been 22% greater than all the previous year months.
Growth is coming back, and we can see that throughout India. Not only in housing but industries like hotels and hospitality have also shown growth mainly. RBI is expecting inflation as temporary, but once the growth picks up in the economy, then we might start seeing some inflationary pressure also. The risk is that we might have the second wave coming down on us in India, then again we’ll have to evaluate the situation.
There is competition in the market for sure, and it is not unreasonable, it is quite fair, and there’s no one who’s creating problems that will affect the sectors in the long term. There is a certain amount of competition, but it is no more than we had at the pre-covid level.
Commercial real estates are as active as the residential market. There was a little concern in the starting phase when everyone was talking about work from home, but most offices are open, and there are no delays in any payment, there are fewer interest rates. People are getting their rent paid timely, so this sector is also thriving.
In addition to what I said previously then the center has also done a lot for the housing sector, e.g., we have a credit link subsidy scheme under which if you are first time in Mumbai. You satisfy certain conditions then there’s an upfront amount that is given by the government which hosts towards reducing your loan.
There is a large population in India that has not even thought of buying a house, and in the next few years, people will get to an age that will require them to buy a house. Therefore, the demand for buying a house in India is structural; it might be slow now in a few years it might take the colossal leap.
If w talk on with specific reference to HDFC then our average loan size would have been 27 lakh rupees but talking about mid-September and October we have our average loan size to be 26lakh and 70k rupees, i.e. 30% less then what it was a year after. Because of the pandemic, many companies have not given bonuses, the salaries have been cut; therefore, the loan amount is reduced this time. Neither we’ve seen massive job losses, salaries cut were there but not to that much of extent.