Vacant houses implies housing bubble can burst any time: Maken

Attributing the housing boom to easy availability of loans, newly-appointed Union Minister of Housing and Urban Poverty Alleviation Ajay Maken today said that the housing bubble could burst in the absence of proper planning.

As per the latest figure, he said, the number of vacant houses in the country were rapidly rising and already accounted for 11 percent of the total housing units in developed areas where middle and upper middle class people live. This is like a bubble which can burst any time.

[caption id=“attachment_509969” align=“alignleft” width=“380”] Attributing the housing boom to easy availability of loans, newly-appointed Union Minister of Housing and Urban Poverty Alleviation Ajay Maken today said that the housing bubble could burst in the absence of proper planning.[/caption]

“We have a situation where on one hand we have 11 percent vacant houses and on the other hand we have shortage of 18.5 million houses. Vacant houses are a bubble that can burst at any time,” Maken said. “Quality planning is of course one of the reasons, tenancy law the other. But I think, one of the more important reasons is perhaps the easy loans which are available for the middle and upper middle class families which are not available for the poor people,” he said.

As per the 2001 census, 3.38 million houses were in Delhi, he said while launching ‘Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFSLIH)’. “Now again next figure is very interesting of this 3.38 million houses, 2.31 million houses were only used for residential purposes, which means one million houses are not used for residential purposes,” he said.

“Out of this 0.38 million houses are totally vacant and this also includes 50 percent of slums and unauthorised colony houses,” he said, adding, “so, if you take only developed houses, it means 20 percent of developed houses are vacant as per the 2001 census when the housing loan boom did not start.”

However, the newly elevated Minister said providing loans to the economic weaker section (EWS) or the low income groups (LIG) could prevent from such a bubble burst to happen.

“So when we are talking about CRGF (Credit Risk Guarantee Fund) it is not only the credit risk we are taking care of but also you are taking care of the bubble burst risk which will never in this segment of economically weaker section. Because anyone taking a loan for LIG or EWS flat, he is going to use it for himself. He is going to stay over there, he would not use it for speculative purposes as the other might do,” he said. “Through the scheme we have launched today, we intend to provide credit risk guarantee to lending institutions against their housing loans upto Rs 5 lakh for new borrowers in the EWS/LIG categories by creating a trust of Rs 1,000 crore,” he said.

PTI