Recent spike in demand for housing not pent-up but structural: HDFC chairman

The recent surge in demand for housing is not pent-up but structural in nature and it will continue to stay, HDFC Chairman Deepak Parekh said.

He said the lower interest rates, stable property prices, and continued fiscal benefits on housing loans have aided the growth in home loans over the past few months.

''The strong demand that one has seen for housing in the recent period has certainly surprised on the upside. I firmly believe that this demand is not pent-up. It is structural demand and that is here to stay,'' Parker said at a virtual proptech summit.

He said the pick-up in demand is a combination of first-time homebuyers and customers moving up the property ladder by shifting to larger homes or acquiring a second home in another location.

With the work from home (WFH) option, the proximity to one's workplace is less compelling and homebuyers have wider options in terms of locations while buying the property, he said.

Parekh also said the construction industry is one of the least digitized sectors in the world.

''It is estimated that the real estate sector spends less than 1.5 percent of its revenue on technology. One would tend to agree that real-time data on real estate is hardly ever available,'' he said.

He believes technology can bring in much-needed transparency and accountability in the real estate sector, and also improve cost efficiencies.

''For instance, the progress of projects can be monitored through digital dashboards, with data driving key decisions. Funding for projects based on achieving construction milestones can be better monitored online,'' Parekh said.

He added that there is so much talk about fintech, health tech, and edutech, but property technology or proptech is still in its infancy.

''Proptech companies can play a big role in accelerating the government's Smart City Mission as well help local-level bodies and municipalities in terms of facilitating online approvals of building projects,'' he said.

For the developers, proptech can help in a better vendor supply management chain and bring in price efficiency.

He said there is no dearth of funding for start-ups that have good business plans.

Parekh further said that after the massive contraction in the global GDP due to the outbreak of the pandemic in 2020, countries across the world are getting into recovery mode.

''Building infrastructure is one way to ensure a sustained recovery without spiraling inflation. It also creates a massive number of jobs and has a multiplier effect on the economy,'' he said.

He said construction and real estate development are going to play a key role in all major global economies.