Good morning, the Chinese government has two choices. It could still step in and save Evergrande, or it could let it sink like a stone to teach the country's real estate sector a lesson in reckless spending.
That said, we will stick to what we know best - writing enjoyable real estate blurbs.
Just like mid weeks, today's Chai is a mix of happiness and concern, but we are with you right through the good and bad, to help you breeze through till the weekend.
Winter Is Coming (With Goodies)
Again, numerous factors could increase demand for property but none can, like a drop is price.
Is That Coming?
Yes. Primary (new homes being built and sold for the first time) market players in Karnataka can now rejoice as the state assembly just passed a bill slashing stamp duty by 2% on affordable apartments.
With this latest amendment to the Stamp Act, 1957, the stamp duty payable on flats priced between INR 35 lakh and INR 45 lakh is slashed to 3%. The 2% reduction, however, is applicable only on first-time registration/primary sales.
Will That Really Ease The Situation?
Karnataka Revenue Minister R Ashoka said that lakhs of flats in Bengaluru and in other cities remain unsold due to the distress caused by the Covid-19 pandemic.
The stamp duty reduction will help both the real estate sector, which is struggling with a pile of unsold inventory, as well as families looking for affordable homes.
Is This A First?
Nope. The Karnataka government had amended the law in December 2020 to levy a reduced stamp duty of 3% for apartments priced between INR 20 lakh and INR 35 lakh.
Prior to that, in the 2020 state budget, the Chief Minister had slashed the stamp duty on purchase of new apartments priced below INR 20 lakh to 2%.
Is It Enough?
Senior Congress member MB Patil urged the government to provide bigger relief along the lines of Maharashtra, which has slashed stamp duties regardless of the apartment's price tag.
Perfecting Digital Mortgage
Lenders need to be able to connect with borrowers, credit bureaus, developers as well as other housing professionals, with ease. Currently most of these people work across different platforms, which is creating a fragmented mortgage ecosystem.
To get around this problem, borrowers need access to systems that offer seamless integration, feature modern capabilities and extreme flexibility.
From automating the identification and verification processes to deploying artificial intelligence (AI) to convert data, lenders need advanced technologies to help them connect and close loans quickly.
How?
Today, more than ever before, homebuyers expect instant access to mortgage information. They desire the ability to start the mortgage application process and then manage their loan when and where it’s most convenient for them.
Fintech players that deliver several digital solutions to support the full life cycle of the customer’s homeownership journey are a step closer to big rewards and even bigger market shares.
Here's what fintech players consider as the apt digital mortgage workflow.
Just Push Play
With end-to-end digital technologies, fintech can deliver a seamless customer experience from start to finish. From loan pre-qualification and approval to processing, closing, servicing and beyond, these powerful solutions can enhance the customer experience by enabling the ability to start the mortgage process anytime, from any device.
Pre Approve
The homebuyer's digital mortgage journey should begin with a complete data capture (e-KYC), and then an instant online check with credit bureaus to determine credit worthiness.
Shortlist And Approval
Once prequalified and connected with the core mortgage portal, customers can access robust, user-friendly content related to mortgage products available on the market, narrow down to the ones that suit them best and seek formal approval online.
Digital Documentation
Post loan approval, homebuyers can view their loan status and any fee changes, review their closing package, and electronically sign important documents online to enable disbursals.
Post Disbursal
After the loan has been disbursed, homebuyers could do with a friendly online/mobile solution to review loan balances, make payments, lookup pre-payment options and explore other related services.
These operational efficiencies – clubbed with end-to-end digital capabilities that span the homeownership journey would also enable lenders and their teams to focus on new products and user experience, so they can recapture and retain more consumers.
The result? Ka-Ching!
Digging Fault Lines
You see, every city in the world has specific areas within it that are called 'posh areas'. Yes, you guessed right, these are the locales where one sees lavish homes, high end retailers and the occasional Mercedes-Benz 300 SL Gullwing.
But amid all this pretty opulence, there is no space for ordinary residents - common folk like cops, teachers, repairmen, factory supervisors, yoga instructors, startup founders or daily newsletter editors.
Reason? Housing prices in posh localities are beyond the reach of the ordinary.
Now, keep increasing the size of this imaginary posh area till it covers the entire city. A gigantic problem begins to emerge. What is a city without its common people?
The Great Divide
In a recent sobering piece by Alan Crawford, we found this profound quote - “We’re witnessing sections of society being shut out of parts of our city because they can no longer afford apartments,” Berlin Mayor Michael Mueller says. “That’s the case in London, in Paris, in Rome, and now unfortunately increasingly in Berlin.”
Soaring property prices are forcing people all over the world to abandon all hope of owning a home and the fallout is shaking up governments.
Silent Global Pandemic
In South Korea, President Moon Jae-in’s party took a drubbing in mayoral elections this year after failing to tackle a 90% rise in the average price of an apartment in Seoul since he took office in May 2017.
In July 2021, the cost of an apartment in Shenzhen, China was equal to 43.5 times a resident’s average salary.
In Canada, Prime Minister Justin Trudeau has promised a two-year ban on foreign buyers if re-elected.
While those are distant examples, look around your own neighbourhood and you'll hear echoes of the same housing crisis. What we’re witnessing is a major event that should no longer be shrugged off or ignored.
Is There A Solution?
To be honest, there are many credible lines of thought out there which could solve the housing crisis but so far, they are just thoughts and can thus be shared for free.
Public Housing - Land parcels in cities must be owned and developed by governments, only to be handed over to the common folks at an affordable price.
Building Smaller Homes - Dwelling units could do with a size restriction, reducing space wastage and housing more people in the same amount of built up area.
Rent Control - The amount of rent chargeable by landlords could be capped, forcibly keeping housing affordable.
Limit Land Speculation - Vacant lands must be used to house people instead of being a money making tool for investors waiting to sell it for a profit in the future.
Increase Taxes - To limit real estate speculation, governments could also introduce higher tax rates on returns from real estate investments, especially land and housing.
Make Rural Attractive - if we get more people to move to rural areas, the demand for housing in cities would decrease and rents/property prices would become more affordable.
Herein surfaces the problem. In reality, every proposed solution to the housing crisis resembles a bad joke. However, if we do decide to get serious as a race, the ensuing result would be nothing short of utopia.
- Indiabulls Housing's INR 200 crore NCDs public issue was oversubscribed four times. The base Issue was oversubscribed by 4.04 times raking in INR 807.83 crore while the retail category was oversubscribed by 2.44 times collecting INR 146.22 crore.
- Sustainability is the trending word these days and real estate is no exception. In line with the trend, an engineer from Cuttack and his daughter have introduced fibre-reinforced plastic (FRP) houses for the first time in Odisha, and they look awesome.
- Pune real estate has clocked sales of around 53,000 housing units in the period between January and July 2021 as compared to about 49,000 housing units between January and July 2019, indicating an almost 8% growth and signalling a revival.
- Iron ore prices extended losses after last week's plunge to a 14-month low. What's hurting iron ore prices and what's in it for Indian steelmakers? Here are some answers.
No matter how daunting the task ahead of you might seem, a cool head, some out of the box thinking and a little chocolate can help you get the toughest jobs done.
Just remember never to quit. 💪
☕ The Crew@Ginger Chai