HDFC Survery Result: Cost of Owning a House Lowest in 30 Years...!

** The average price of a house, purchased with a housing loan, rose to over Rs. 45 lakh..!

** The average cost of owning a home stood at 4.7 times the annual income of the home buyer in 2012-13.

** The annual income of the house buyer along with the price of the home, stood at as high as 22 in 1994-95

** 60 % of population is below 30 years and there is a rapid rise in new households.

**  The affordability ratio has remained in the range of 4.5 - 4.7 for 5 consecutive years.

** The house prices have nearly doubled for 5 consecutive years.

** Fhe average annual income of a housing loan customer has almost tripled during is period from less than Rs. 4 lakh to close to Rs. 12 lakh at present.

HDFC FULL Report...!

The average cost of owning a home stood at 4.7 times the annual income of the home buyer in 2012-13

House prices may have been on an upward spiral for many years, but the cost of owning a house in India remains near the most affordable level in over 3 decades, shows data compiled by mortgage giant HDFC.

The average price of a house, purchased with a housing loan, rose to over Rs. 45 lakh in the financial year 2012-13 - marking the 4th consecutive year of uptrend from nearly Rs. 25 lakh in the year 2008-09, HDFC has said in a presentation.

However, factors such an even greater surge in the personal income levels, tax incentives and lower interest rates have resulted into houses becoming more affordable to purchase, HDFC said.

As per an ‘affordability’ ratio compiled for over three decades by HDFC, the average cost of owning a house stood at 4.7 times the annual income of the home buyer in 2012-13.

The affordability ratio, which takes into account the annual income of the home buyer along with the price of the house, stood at as high as 22 in 1994-95, but has been mostly on a declining trend since then.

This means that a home buyer, on an average, neededs an amount equivalent to nearly 22 times his/her annual income in 1994-95, but an amount less than 5 times of the annual earnings is required for purchasing a house now.

HDFC has released this dataset as part of an investor presentation on its latest financial year results.

Explaining the improved affordability in the housing market, HDFC said it has been possible because of rising disposable income, tax incentives (on interest & principal repayments) and affordable interest rates available to housing loan customers.

The lender further said that the mortgage market was also witnessing a high demand growth because of increasing urbanisation and favourable demographics of the country, where 60% of population is below 30 years and there is a rapid rise in new households.

Interestingly, the affordability ratio has remained in the range of 4.5 - 4.7 for 5 consecutive years now, although the home prices have nearly doubled in this period.

Excluding a temporary dip during 2008-09, the house prices in India country have been rising for 11 years now, after hitting the lowest level in two decades at below Rs. 15 lakh in the year 2001.-02.

However, the average annual income of a housing loan customer has almost tripled during is period from less than Rs. 4 lakh to close to Rs. 12 lakh at present.

To be precise, the affordability ratio of 4.7 during the the last financial year 2012 - 13 is the fourth lowest ever figure, after after 4.3 in the year 2003-04, 4.5 in 2008 - 09 and 4.6 in 2011-12.

As per industry experts, home loan demand would remain strong as long as the affordability ratio stays in the range of 4.2 - 5.5 times, while various tax incentives on home loans are making them affordable for the consumers.

Income Tax Incentives

HDFC further said the income tax incentives also lower the effective interest rate on mortgages, while the Union budget 2013-14 has provided an additional one-time benefit of interest deduction up to Rs. 1 lakh for first time home buyers, provided the loan amount and property cost does not exceed Rs. 25 lakh and Rs. 40 lakh, respectively.

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