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Thursday, May 01, 2008
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Online edition of India's National Newspaper Thursday, May 01, 2008 ePaper | Mobile/PDA Version |
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Tamil Nadu
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Chennai
“Rental costs are high. I’d rather put more money into EMIs for housing loan repayment” Enhancement of limit on priority sector lending for the housing sector is a fresh incentive Chennai: Amudha and Kumar, a young couple from south Tamil Nadu, did not waste too much time buying a house when they decided to settle in Chennai. They are glad that they made the decision, although raising money for the initial down payment was not easy. Their independent house near Kattankulathur — about 30 km from Chennai — cost Rs.7.5 lakh a year and a half ago. The value has tripled now and they have enjoyed tax benefits. A large section of young people, only a few years into their careers, are opting to buy homes as an investment. The easy availability of housing loans, the need to curb their tax deductions and the appreciation in real estate value are the primary reasons why they decide to buy a place for themselves. Peer pressure also seems to be working on their minds. “I had not really thought about buying a home. But some relatives of ours — only a few years older than us — bought a house, we decided we would too,” said Kumar, who is in his early thirties. Several mid-career professionals have taken housing loans to buy well-appointed homes in the heart of the city. S. Rajkumar took a housing loan from IDBI Bank to buy an apartment in 2005. The flat, located on Royapettah High Road, cost Rs. 2,900 per square feet then. The going value in the area is Rs. 8,200 per square feet now. “Housing is turning really costly,” said Rajkumar, secure in the knowledge that he has made a sound investment. Young IT professionals say that EMI payments take a heavy toll on their pay packets but say they would rather own than rent. “Rental costs are so high. I’d rather put more money into EMIs because I will have my own place in about 10 years,” said 26-year-old R. Daniel, an employee of a financial services firm, who owns a house in Purasawalkam. R.K. Sinha, deputy general manager of Bank of Baroda, is witness to the trend of young people buying homes early into their careers. “Especially with double incomes and banks liberally giving loans,” he said. The limit on priority sector lending for the housing sector has recently been moved up from Rs. 20 lakh to Rs. 30 lakh. This is a fresh incentive for banks to market their home loan products up to Rs. 30 lakh, said Mr. Sinha.
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