Hence, at some point in life the construction of a house is undertaken and if it is not possible, then at least an apartment is bought.
It is obvious for the head of the family to feel the need of owning a rightful shelter for his or her family. So, owning a house is not just a matter of construction but of affection as well. There is no other option than to apply for home loans and the increase in interest rates have certainly made the dream of owning a house an expensive one.
The government should make some arrangement to at least keep the home loans within the reach of the commoners. In the interim the State government had ceased their house loan scheme which had created discontent amongst the government employees. Thankfully, the government did find a way and this proves how sensitive the issue of home loans is. It cannot be denied that the dream of many to own a house has suffered cracks thanks to the inflation. The government should place the emphasis upon making affordable houses available.
In fact, that was the very reason why Goa Housing Board was formed. The Board’s operations include buying plots, developing them, and providing residential sites and housing facilities to the Goan population at a reasonable price. However, this does not seem to be happening. There is a huge gap between the demand for houses and supply by the Housing Board which is why those interested in buying houses have to rely on the housing projects of private developers and contractors. The dream of buying a plot and then building a house has already gone out of hand for the middle-class citizens.
A question can be raised as to why the prices of apartments have skyrocketed. The prices of anything depend upon the demand and supply. The fundamental economic principle is that if the demand exceeds the supply, prices tend to rise while the prices fall if the supply exceeds demand. The demand for the apartments in the State and the available apartments does not match. The answer for this is rooted in rich people from other States who look at Goa as a safe place to invest in their second homes. The number of people who own holiday homes in Goa is not less which is why if one happens to visit a complex, he or she would notice the number of closed flats in the building. The owners of these apartments are based elsewhere but they visit the State once in a while for vacations. Such flats in the meantime are given on rents which again, are usually high. The old houses in the villages too fetch good rates; older the house, higher the price. The cost of construction has increased, the rates of plots are soaring and the sale of flats is being carried out at high rates. Banks making loans expensive have only added to the woes of the common people. Home loan is a crucial tool for people to fulfil their dream of owning a house, a culture, which emerged in the 90s, thanks to housing finance companies. Banks too eventually started to lend home loans at affordable rates. The market for real estate expanded post-2000 and was aided by the housing loans. The interest rates on home loans earlier ranged from 6.30% to 7%. The rate of 6.30% was attracting customers as long ago as a year before, the rate which has now, however, jumped over 9%.
The prime reason behind the rise in interest rates of home loans is the increase in repo rate by RBI. Repo rate which was down to 4% during the pandemic has gone up to 6.30%. Repo (Repurchasing Option) rate is the interest rate banks have to pay to the RBI when they take loans from the country’s central bank.
The repo rate is used by monetary authorities to control inflation. There was no fixed formula for interest rates on home loans until RBI imposed a condition of having a certain basic criteria. Since then a certain percentage of interest has to be paid to RBI on the home loans with reference to the repo rate. Naturally, the interest rates on home loans started to rise with RBI making an upwards tweak in its lending rate. The government should at least think of providing home loans at affordable interest rates as Goa Housing Board has failed to provide affordable housing facilities. If not, the unfulfilled dream of owning a house will keep haunting the public which is not ideal for a peace-loving state like ours.
