Housing investment and finance system: Role of Public and Private sectors

Shelter is recognized as a basic human necessity next to food and clothing.  The natural desire of every individual is to own a home for providing shelter to himself and to his family, and this one aspect is regarded as his biggest priority investment.  Unfortunately, in Kochi, despite all the efforts made by the government, ownership of a house remains a distant dream for a large segment of the population.  One of the major constraints is the non-availability of finance.  When considering the final cost of a single Apartment Kochi City’s hot areas are out of bounds for people with small and marginal incomes.
 
The recent studies made by the Society for Development Studies have emphasized the need for developing a special approach to housing finance and the need for establishing decentralized institutions, which can develop location specific programmes and also evolve innovative strategies for mobilizing household savings. 
 
The government finally seems to be aware of the problem.  Its draft housing policy issued by Union Ministry of Urban Development in May 1990 recognizes the need for reorganizing the housing finance system with interest rates and fiscal measures geared to mobilize savings and resources.  It reiterates that there is considerable scope for mobilization of substantial resources in the economy for the housing sector provided innovative strategies and instruments are adopted.  
 
Again as a result of the interaction with the Society for Development Studies, and in view of the special features of the housing requirements of States like Kerala, the national government has recognized the need for setting up a separate housing finance institution for the southern region.  The raison de etre of a regional level housing finance institution is to afford an opportunity to the region to develop a financial system on terms that are within its absorbing capacity, institutional infrastructure, socio-economic conditions, cultural traditions and legal system. 
 
In the context of these developments, the study surveyed the present scenario of housing investment and housing finance system with particular reference to the role of public and private sectors and incorporated various suggestions for making the housing finance system an effective instrument for increasing the housing stock in the country.