According to our new research report "Indian Housing Sector Analysis", the housing industry in India has experienced upward movement even in the tough global economic conditions. The main reason for growth is the rising number of low and mid-income group in the country's Tier I, II and III cities. These households have the potential to make investments in the affordable houses as their purchasing power meet the value of average affordable homes. We have also found that the mid-income households reported the fastest year-on-year growth in the last fiscal year (FY 2010) that prompted many prominent developers to come up with new investment plans.
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We have also found that banks slashed the interest rates on loan for Real Estate Developers to encourage them for investments in affordable houses. Besides, the realtors have received full cooperation from the government organizations (Indian Planning Commission) and regulators (RBI and the Ministry of Finance) in the form of supportive measures to meet the rising demand for affordable houses. For instance – the Ministry of Finance announced in the beginning of 2010 announced that the 1% interest subsidy scheme would continue until March 2011 to boost the affordable housing demand.
Analyzing all the factors and developments taking place in the segment, we project that the sales of affordable houses will grow at a CAGR of around 2% during 2010-2013. The leading real estate developers will aggressively make strategies to exploit the potential demand. The Indian government will continue to give its support to the housing industry by framing lucrative and investment friendly policies.
The forecast given in the report is based on the correlation between past market growth and growth in base drivers, such as household size, disposable personal income, GDP growth, long-term interest rates, competitive structure, government support, contribution by housing finance industry and growing industrialization.