India has wider scope for growth in mortgage finance: Deepak Parekh

“I strongly believe that the runway for mortgage finance in the country is immense,” Parekh said while addressing a real estate conclave on Saturday.

Urbanisation in India is an irreversible trend, he said adding that currently 32 per cent of the population resides in cities and this is expected to be 40 per cent by 2030.

Parekh said India still has a huge housing shortage estimated at over 29 million units.

He suggested that the Credit Linked Subsidy Scheme (CLSS) which came to an end last year and was a game changer, especially for the economically weaker sections and low-income groups, should continue to improve home affordability.

“While one recognises that fiscal support cannot be without hard timelines, given the shortage of housing in the country, I am a strong advocate that the CLSS component at least for the lower income groups should have continued for a few more years,” he noted.

Parekh said the definitions of economically weaker sections and low-income groups or even the loan and property amounts used to qualify for priority sector housing loans need to be periodically revised to reflect changing market realities.

He said that the country’s real estate market needs a lot more affordable and mid-income housing stock.

Time and time again, many developers tend to build without correctly assessing where the real demand is. The demand for affordable housing is immense. Affordable housing projects at the right location and right price points may have lower margins, but the velocity of sales and cashflows are much faster, he said.

“Don’t be too ambitious in trying to launch too many projects at one time. This is a mistake made repeatedly by many developers only to end up getting cash strapped or being over-leveraged,” he stated.

He also suggested that developers should bring in a larger share of equity into the project.

Parekh further said against the uncertain global backdrop, India has increasingly been in the spotlight for being amongst the fastest-growing major economies.

He said India is not immune to global disruptions and some slowdown in growth is inevitable.

“But since India is a domestic, consumption-based economy, the economy is less dependent on the global economy compared to say, countries that rely heavily on exports,” he said.

Parekh said India has never been in a stronger position than it is today.