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Would the government’s decision to increase the home size for middle income group (MIG) under the credit linked subsidy scheme help in clearing unsold stock and reviving demand in the realty sector?
A day before, the Ministry of Housing and Urban Development approved increasing the carpet area in the MIG-I category of CLSS from the existing 90 square metre to up to 120 square metre and increasing the carpet area in respect of MIG II category of CLSS from the existing 110 square metre to up to 150 square metre. The changes are effective from January 1, 2017.
According to builders’ body National Real Estate Development Council (NAREDCO), this move would bring the entire demand for affordable housing under the interest subvention scheme, accounting for almost 96% of the total demand for housing in the country.
Confederation of Real Estate Developers’ Associations of India (CREDAI), another Developer’s body feels the average middle class in smaller towns and cities would now be able to afford bigger and better quality homes than before.
The increase in threshold limit would not only enable the middle income group buyers to avail interest rate subvention under CLSS, but also dilute the impact for the lower strata of the society with lower ticket size and that the subsidies might be more effective, if restricted to EWS/LIG segment in the interest of inclusive goal of housing for all.
Prime minister on December 31 last year had announced the CLSS under the Housing for All 2022 (Urban) for people belonging to the MIG category, valid till the end of December this year. However, the government last month extended the validity of interest subsidy benefit by 15 more months till March 2019.
According to a leading Real Estate Finance Company, the fence sitters specially, who were delaying their home purchase, would now be given a further push.
Builders, meanwhile, would not only enjoy the general uptick in the market that, but would also accelerate the sale of housing units which were earlier missing out on a sizeable portion of the Middle Income Group audience.
Would this decision of government beside helping in clearing unsold stock, also encourage developers to launch new projects?