Role of Housing Finance Companies in Enhancing Housing Developments
Housing is a basic necessity for people to be it in rural or urban areas. A house is needed to protect life and property as well as to promote well-being. There is a growing demand for housing as the population of India has had a phenomenal rise. In India, natural diversities, geographical and climatic changes and socioeconomic disparities have increased the magnitude of the housing problem.
Despite the fact that there has been a sharp increase in the construction of houses in the past two decades, escalating land prices, scarcity of land in urban centres and high-interest rates have dampened the pace of real estate in Kerala in recent years.
Let’s check out the role of housing finance companies in enhancing housing developments
There exists a sharp divide between total demand and the total stock of houses. The shortage arises due to many reasons like the rapid pace of increase in population, urbanization, changing the family structure, rising per capita income etc. The housing shortage could not be tackled by the Government alone as huge amounts are needed and this has marked the arrival of banks and other financial institutions in this sector.
The Government has set off ongoing economic deregulation measures, especially those in the financial and banking sector to boost real estate & there have been marked changes in the housing finance system in India. Various housing loan schemes for the rural and urban population have been initiated like the National Housing Policy (NHP) & the National Housing Bank (NHB).
HUDCO was set-up by the Government in 1970 to meet the financial needs of the housing and urban infrastructure. In 1977, HDFC was set up as the first housing finance company in India with private participation.
Today, there exists a cut-throat competition particularly after the entry of commercial banks in the housing finance arena. There has been a gradual fall in the interest rates which have almost halved over the last decade with the exceptional growth in the housing loan market. All these developments have resulted in housing loans made more affordable to the public.
Notwithstanding these welcome features, many challenges and risks have also surfaced to a considerable extent, like dilution in due diligence, very relaxed norms, terms and conditions etc.; which in turn are inimical to the interests of the banking system.
Over the last few years, the housing finance industry has marked a robust growth. People have started to buy apartments in Kerala with the help of housing loans
Many institutions extend housing loans like:
- Scheduled Commercial Banks
- Housing Finance Companies
- Scheduled Cooperative Banks (Scheduled State Co-operative Banks, Scheduled District Co-operative Banks and Urban Co-operative Banks)
- Regional Rural Banks
- Agriculture and Rural Development Banks
- State Level Apex Co-operative Housing Finance Societies.
Apart from these, money lenders, individuals, friends and relatives etc. is also involved in the field of housing finance.
All these moves have perpetuated the growth of real estate in Kerala and set the sale of apartments in Kerala to an all-time high. It is very well evident that the role of housing finance companies is in enhancing housing developments.