Overall real estate demand slow and prices have corrected by 20% to 25% in certain markets
While the COVID-19 pandemic has impacted the real estate sector with many homebuyers postponing their purchase decisions, it is the millennial segment that is now looking for homes to buy rather than renting them, Rajan Suri, Business Head - Retail Assets, PNB Housing Finance told Moneycontrol.
Almost 60 percent of the company’s customer base comprises of around 35 - 40 year-olds.
“Millennials do not want to waste time. They also have high disposal incomes. They want prompt service and our digital initiatives help them get loans processed faster,” he said.
PNB Housing Finance (PNBHFL) recently launched a digital customer onboarding platform called ‘Ace’ to facilitate easier and safer approval and disbursal of loans with minimal physical interface. The platform enables customers to log into the PNB housing portal, fill the loan application, and upload the necessary KYC documents for online verification.
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Overall, the real estate market is slow. Homebuyers are also postponing their purchase decisions due to the uncertainty around jobs and how long the pandemic will last, he said.
Developers too are focusing on completing their projects rather than launching new ones.
The demand during the pandemic is primarily for the resale market, especially ready-to-move-in projects.
“Affordable housing is witnessing traction. Affordability too is improving because real estate prices have corrected by almost 20 percent to 25 percent. These are being given either in the form of direct benefits to the customers or discounts,” he said.
Tier 1 cities such as Bengaluru, Hyderabad and Pune these are better placed rather than NCR and Mumbai in terms of real estate demand picking up.
Demand too has dipped considerably. “Earlier we were doing log-ins of almost 10,000 and now the number has gone down to 6000. There is a correction of almost 30 to 35 percent even in terms of demand from prospective borrowers,” he said.
As for demand for a moratorium on payment of housing loans by homebuyers, Suri said that several developers and customers had opted for the facility. However, demand for moratorium dropped during the phase 2 announcement.
“Post the first announcement the moratorium was at 49 percent of retail AUM. This number came down to 29 percent during the second announcement,” he said.
Reserve Bank Governor Shaktikanta Das in May this year had extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis. The EMI payments will restart only once the moratorium time period expires on August 31.
In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020. As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity.
Asked about the number of defaulters’ assets and whether the company is resorting to discounts to sell housing inventory held against construction loans given to customers for developer property, Suri said that the number of such assets is ‘static’ and is under control.
“The real estate sector is undergoing stress and this is likely to continue for some more time. Having said that, the maximum stress is in the luxury housing market,” he said.Will the number of such properties increases once the moratorium deadline comes to an end, “only time will tell. We are keeping our fingers crossed,” he added.