Housing : Viable Foundation

It is interesting that in the current scenario of downturn in almost every sector of the economy, the relatively newly emergent housing sector should exhibit such confidence. All the 29 approved housing finance institutions in the country have shown soaring disbursals, a rise of 39 per cent from Rs 9,000 crore in 1999-2000 to a projected Rs 12,500 crore this year. Partly this is a result of the incentives in the budget in the last two years when housing has been treated as a priority sector. Other policy initiatives include changes in the land ceiling laws, tax concessions and lower interest rates. Equally however, the boom is prompted by the depression in the economy and the falling real estate prices which have made middle class urban housing affordable. Today the cost of a house is four to five times the annual salary of a typical user of housing loans whereas in the past it used to be 14-15 times the salary of a borrower. In this light to suggest that the current housing boom may encourage a rising demand in the depressed construction-related sectors such as steel and cement would be optimistic.