Budget 2017: Expect FM to announce measures to lift real estate: IMGC Chief
In an interview to Moneycontrol, Amitava Mehra, CEO, IMGC, says he expects Finance Ministry Arun Jaitley to take measures to boost home sales.
India Mortgage Guarantee Corporation (IMGC) provides guarantee on home loans to lower the risks borne by lenders, enabling softer loan terms and easier access to finance for homebuyers. In an interview to Moneycontrol, Amitava Mehra, CEO, IMGC, says he expects Finance Ministry Arun Jaitley to take measures to boost home sales and provide incentive to lenders to provide loans on better terms.
Q: What are your expectations from the Budget?
A: From the perspective of overall economy, I expect the upcoming Union Budget to give thrust on investment in infrastructure. Given the demonetisation exercise, another important aspect would be measures to reinvigorate consumption. From the industry standpoint, I expect the Finance Minister Arun Jaitley to outline steps and timelines to ensure implementation of the real-estate linked measures announced in the past. Additionally, streamlining of stamp duty structures in line with the expectations that the registered value of the property will increase is expected. Also, incentive to lenders to take on the additional risk stemming from the higher Loan-to-Value (LTV) would be a step in the right direction.
Q: Do you expect FM to announce measures to soften home prices and increase offtake?
A: While measures to soften home prices is not expected from the Budget since that is not the role of Union Budgets, however it should ensure that the programs are setup to facilitate increase in sales offtake which have dropped in the last 2 months. Additionally, industry would also be hoping for some short-term relief for lenders to boost credit offtake, specifically in housing.
Q: What are the factors that would drive home sales in 2017?
A: At this point, consumer confidence would be key to driving home sales. Today, in the post demonetisation era that confidence has been shaken and consumers need to get comfortable once again to move forward. In this scenario, sales will be limited to the genuine home buyer as home buying from perspective of speculation will reduce.
Q: Banks have lowered home loan rates recently? What has been its initial impact on sales?
A: It is too soon to assess the impact. Consumers need to figure out the exact benefit and then take action. In the short term it will lead to a churn of the portfolio as customers switch to a lower rate regime.