Shares of LIC Housing Finance, Can Fin Homes, HUDCO, PNB Housing Finance, Home First, and Aptus Value Housing fell by up to 1% on July 23 following Finance Minister Nirmala Sitharaman’s announcement of a ₹10 lakh crore boost for urban housing. Investors chose to book profits after these stocks had surged in anticipation of the Budget.
The Budget introduced Urban 2.0, a plan aimed at addressing the housing needs of 1 crore urban poor and middle-class families with a significant investment of ₹10 lakh crore. The initiative also includes interest subsidies to make loans more affordable.
In addition, the Pradhan Mantri Awas Yojana (PMAY) will be expanded to add 3 crore more houses. Of these, 2 crore will be designated for rural areas. This marks an increase from the previous allocation of ₹80,671 crore for PMAY in the interim Budget, which had been revised from an initial ₹79,590 crore to ₹54,103 crore for the 2023-24 fiscal year.
The PMAY scheme, launched in 2015, aims to provide durable houses with essential amenities to eligible urban beneficiaries. Piyush Gupta, Managing Director of Capital Markets & Investment Services at Colliers India, highlighted that the ₹10 lakh crore allocation for rental housing is a significant boost for the real estate sector, expected to spur infrastructure development and create job opportunities.
Despite this, the affordable housing segment has faced challenges since the COVID-19 pandemic, with sales and supply of affordable homes declining. According to real estate consultancy Anarock, the share of affordable housing sales dropped from over 38% in 2019 to 20% this year. The supply of affordable homes also fell from nearly 40% in 2019 to 18% this year.
Over the past decade, housing finance companies have outpaced banks in growth, with outstanding individual housing loans in India reaching ₹30 lakh crore as of September 2023.
Disclaimer: The views and investment tips expressed by investment experts are for informational purposes only.
