Affordable Housing - A Solution to Homebuyers’ Dilemma
08 Aug 2016
Home buyers have a difficult time deciding on the right time to buy a residential property. While favourable economic conditions result in higher incomes, they also lead to an increase in real estate prices, making it difficult for buyers to purchase homes. On the other hand, during economic slowdowns, buyers become cautious about their incomes and adopt a more planned approach to their expenditures or purchases.
Affordable housing may be a good solution to this homebuyers’ dilemma. It can help ensure housing supply across different sections of society.
What makes these homes affordable?
The parameters that determine the price of an affordable apartment can be attributed to its location, type of project and also the construction technology used.
Buying affordable housing has numerous advantages as well as disadvantages. We list both its pros and cons here:-
- The interest shown by a number of large corporate groups in this sector is likely to bring in timely delivery of projects.
- There is increased liquidity for investors when they want to sell the house.
- An additional advantage is that first time home buyers can avail a tax deduction of Rs.50,000 on the interest paid on their home loan up to Rs.35 Lac, provided that the house value does not exceed Rs.50 Lac.
- With affordable housing, low and moderate income families are able to spend more on food, education, receive necessary medical care and provide reliable day care for their children.
- The development of affordable housing creates a significant number of construction-related jobs.
- Most of the affordable housing projects are located on the outskirts of cities, so the absorption in these projects could remain low, despite the high demand. Due to dearth of buyers, the formation of society or the residents’ welfare association may be delayed.
- As a result, the maintenance of the project’s premises will be affected and buyers may have to depend on the developer for the same.
- Most affordable projects don’t have the upscale amenities associated with other projects.
As you can see, the pros outweigh the cons. So if you are planning to buy a home and can compromise on distance and on amenities, then you can definitely think of buying an affordable housing project. However, the home should be chosen after proper studying and analysing, i.e., one should check if the area has good growth prospects.