Realty stocks rally up to 10% after increase in carpet area of houses
Realty stocks rallied up to 10 percent intraday Friday after the government on Thursday approved the enhancement of the carpet area of houses for the middle income group (MIG) category under the Pradhan Mantri Awas Yojana-Urban (PMAY-U). The upside was also partly led by positive market conditions after Moody’s upgraded India’s sovereign rating to Baa2 and changed the outlook to stable from positive.
The Nifty Realty Index gained as much as 4.7 percent today, backed by HDIL, DLF, Indiabulls Real Estate, Unitech, Prestige Estates, Godrej Properties, Brigade Enterprises and Sobha.
In fact, it was the biggest gainer among sectoral indices.
“The cabinet’s decision is a massive positive for the macros of housing. The home buyer now has a larger pool of prospective houses to choose from. The fence sitters specially, who were delaying their home purchase will now be given a further push,” Gagan Banga, VC & MD, Indiabulls Housing Finance said.
Builders, meanwhile, will not only enjoy the general uptick in the market that is ahead of us, but can also accelerate the sale of housing units which were earlier missing out on a sizeable portion of the Middle Income Group audience, he added.
Under the MIG-I category, the carpet area of the houses has been enhanced from 90 sq.mtr to 120 sq.mtr, while under the MIG-II segment, it has been increased to 150 sq.mtr from the current 110 sq.mtr, Union minister Ravi Shankar Prasad said.
Under the MIG-I category, a four percent interest subsidy is provided to the beneficiaries, whose annual income is between Rs 6 lakh and Rs 12 lakh, on a loan of up to Rs 9 lakh.
Similarly, under the MIG-II category, the beneficiaries with an annual income of Rs 12 lakh to Rs 18 lakh get an interest subsidy of three percent on a loan of up to Rs 12 lakh.
Under the PMAY-U, the Centre aims to provide houses to all the urban poor by 2022. Currently, the shortage of houses is pegged at over 10 million in the urban areas.