India’s 19 million unit housing shortage

September 3, 2008 by OPPE News

Demand for homes in India will become “stronger and more intense” despite a current slump in the property market, experts say.

The Associated Chambers of Commerce and Industry of India (Assocham) said high interest rates and soaring prices had hit sales.

However, the group also said there remained a demand for real estate from first-time buyers – a group which accounts for 90 per cent of new home loans in India.

Assocham revealed India now has a housing shortage of about 19.4 million units, of which 6.7 million are needed in urban areas and 12.7 million in rural regions.

The association also said:

“However with rising income, a swelling middle class and rapid urbanisation, the demand is set to shoot up and it is estimated that an additional 45 million units would be required for both rural and urban areas by 2012.”

With a population growth of about 1.6 per cent per annum and GDP growing at nine per cent per annum, income is expected to quadruple by the year 2020.

An Assocham research paper also says home loan interest rates have shot up from seven per cent in 2003 to over 12 per cent in 2008.

The increase has been felt “across the board” by buyers, speculators, real estate developers and bankers, Assocham said.