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Structural demand for housing sector remains strong, says HDFC’s Keki Mistry

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Structural demand for housing sector remains strong, says HDFC’s Keki Mistry

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CLSA believes that the housing sector has bottomed out and with improvement in gross fixed capital formation as a percentage of GDP, the brokerage expects the housing sector to perform well ahead. Keki Mistry, VC & CEO of HDFC, shared his views and outlook on the housing sector.

CLSA believes that the housing sector has bottomed out and with improvement in gross fixed capital formation as a percentage of GDP, the brokerage expects the housing sector to perform well ahead. Keki Mistry, VC & CEO of HDFC, shared his views and outlook on the housing sector.

"The structural demand for housing sector remains strong," Mistry told CNBC-TV18 on Wednesday.
He further said that the number of projects under construction now is lesser than what it was 2-3 years ago.
According to him, "Huge supply has created unsold inventory in the housing sector."
Talking about the GST subsidy, Mistry said, “The new GST subsidy could be a bit of a game changer because with a GST rate of 12 percent it was pushing house prices higher and a lot of people were hesitating to buy a property at that point of time.”
“Now with a proposed reduction in GST rate from 12 to 5 percent, more customers would come to the market because they would now know that there is no further scope for GST rates to come down,” he added.
“All this while some people were holding on to purchasing a house in the expectation that GST rate would come down and therefore the cost of buying the house for them would also be lower,” Mistry said.
When asked about CLSA’s report on a fall in investment in homes, he said, “I would say it is not an investment in homes. Investment is a very broad word. Investment has 2 meanings. One is people buying a house because they need a house to stay in and that demand has been strong and has been strong for the last couple of years.”
“The second category which is people investing in a property as a second home or a third home or just an investment – that is very low and that has been low for a very long time. People used to invest in real estate at one point of time years ago but over the last 4-5 years peoples’ investment in real estate; investment as in buying second and third home has come down, but genuine homebuyers, people who are buying a house because they need a house to stay in – that number has kept going up and that has also partly to do with the demographics in India.”
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