Housing sector faces its worst ever crisis due to Covid-19

Already reeling under liquidity concerns, low demand and high inventory levels, India's housing sector is facing its biggest-ever crisis amid the pandemic and the nationwide lockdown, says Jaxay Shah, chairman of the Confederation of Real Estate Developers' Associations of India (Credai).

Shah said that the sector is currently in a 'very fragile' state as it has faced several disruptions in the past four years, including demonetisation, Goods and Services Tax (GST) and the much celebrated Real Estate (Regulation and Development) Act.

Noting that jobs of about 12-13 crore labourers are at stake across real estate, infrastructure sectors along with the related MSME industries which provide raw materials and inputs, he said that the crisis now is much bigger than the 2008-09 economic crisis or any other problem the housing sector in India has ever faced.

The realtors' body's chief who has been off late writing to the Centre seeking immediate support for the sector to survive, said that the central government should take steps to support and revive demand, including a two per cent interest subsidy or interest waiver on home loans.

According to him, it would cost the Centre Rs 8,000 crore at the most. He also suggested an immediate resumption of the interest subvention scheme suspended by the National Housing Bank last year.

Shah said that interest subvention is the 'need of the hour". Increasing the ambit of the Pradhan Mantri Awas Yojana, by raising the income limit and with higher subsidies, would also help increase demand among prospective home buyers, he said.

"There has to be some demand created by the government to encourage customers. The government has to give some fiscal benefit and more of a non-fiscal benefit."

The Credai chairman also said that the industry body is trying to come up with a financing product with NBFCs and HFCs for easy and customised loans.

Stressing that the government should take immediate steps to revive demand, Jaxay Shah said: "We want to jump start, not kick start".

He also reiterated support for developers to resume the supply chain, through restructuring of loans and interest moratorium.

In a recent letter to Prime Minister Narendra Modi, Credai had said that the sector requires a one-time loan restructuring scheme as allowed by the Reserve Bank of India in 2008 amid the global financial crisis.

Shah was also of the view that with the present crisis may lead to further consolidation.

On the possibility of fall in property prices, he said that as prices have bottomed out over the past four years, they are unlikely to fall across the board, although there may be isolated cases of developers selling few flats at lower prices.