Home loan industry suffers biggest drop in growth since 2013
- Wednesday 20th December 2017
- Author: Yash Verma
The real estate sector of the country has been through a number of ups and downs starting from the demonetization phase in the year end of 2016.
A report from the Centre for Monitoring Indian Economy (CMIE) has revealed that the home loan growth dropped down 32.7%.
The drop in home loans was only 4.27%, whereas in 2015 the home loan sector observed a rise of 26% for the same period.
The absence of an Authority on the contrary makes it difficult for the consumers to invest in the real estate as well.
The real estate sector of the country has been through a number of ups and downs starting from the demonetization phase in the year-end of 2016. The realty sector has already struggled to keep its customers satisfied in the past due to a huge number of frauds that are committed in the Indian real estate, let it be by the real estate developers or even the average brokers.
The one measure that was started to turn it all was the implementation the Real Estate (Regulation and Development) Act, 2016. However, due to its poor implementation by the state governments in the early stages, the Act so far seems to be unable to reach to its full potential to make any good of the Indian real estate. Only a number of states have observed a positive effect of the RERA Act where the Regulatory Authorities have been strict enough.
In recent events relating to the realty sector, a report from the Centre for Monitoring Indian Economy (CMIE) has revealed that the home loan growth in the period starting from April to October dropped down 32.7% from what was in the past year for the same period. This has been one of the biggest falls in home loan growth in the last five years. In the same period last year, the drop in home loans was only 4.27%, whereas in 2015 the home loan sector observed a rise of 26% for the same period. The steep downfall of the home loan sector clearly indicates the complications that the realty sector is facing.
Demonetization had previously slowed down the growth of the real estate sector as well as the home loan sector in the 2016 end. The after effects of which were seen across the starting of 2017 as well. After this, the introduction of Goods and Service Tax also seemed unfavorable of the real estate sector. Due to the GST, prices of the real estate were surged, which resulted in that the consumers in holding back before investing in the real estate. Then the introduction of RERA in May 2017 further affected the real estate sector of the country adversely. Due to the mandatory registration of real estate developers with the real estate regulatory Authority of the respective states, consumers are now only interested in the RERA certified developers and projects, because of which the real estate developers in the states that have not yet set up a proper Authority are suffering losses. The absence of an Authority, on the contrary, makes it difficult for the consumers to invest in the real estate as well.
However, it is expected that as soon as the real estate act spreads all across the country, the realty sector and the home loan growth will start to rise again. RERA has brought back the attraction of people to invest in the real estate again and with more concepts like REIT on track, it is sure that the Indian real estate will not fall from now and rather become one of the biggest sectors of the country to invest in near future.
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