Cheer for housing finance companies, stocks outperform benchmark indices

Affordable housing witnessed an increase in the new launches last year. On the other hand, due to rise in inventory, high-end residential unit launches declined. The government initiatives such as 'Housing for all by 2022' has also aided affordable housing. Also, real estate prices in India have increased drastically over the years. Because of high real estate prices, middle class people are shifting to affordable housing segment nowadays.

On December 31, 2016, the Prime Minister of India, Narendra Modi announced an interest rate subvention of 3 per cent and 4 per cent for loans up to Rs 12 lakh and Rs 9 lakh under the Prime Minister Awas Yojana. Several factors like falling interest rates along with demonetisation, has turned positive for affordable housing. In addition to this, Finance Minister Arun Jaitley put a cherry on the cake by giving infrastructure status to the affordable housing. After this status, affordable housing now will be in the list of priority lending sector for the banks. Owing to this, stocks of many housing finance companies have shot up.