Housing finance allover the world are undergoing tremendous changes and have acquired greatsignificance in the present day context of liberalization, globalization andmodernization of the society. A good number of research works have been undertakenby individual researchers and institutions invariably dealing with differentaspects of housing finance. A brief review of the major studies which areparticularly pertinent for the present study is attempted here.
In the past years academicians, professionals andjournalists have conducted research or written articles on issues of housingfinance. A comprehension of these research works is essential in order todevelop conceptual clarity of explored areas and also build insight into areas,which have been inadequately captured by previous empirical researches. Thischapter deals with some of the studies, which help to generate insight intohousing finance growth and its impact.Deepak Parakh (1998)1, in his article, “Housing and FinancialIntermediation, Operational Links and Private Sector Initiatives in IndianContext”, argues that a formal housing finance system must be able to help ahousehold to make investment in housing and must bring affordability whichenables a more efficient restructuring of resources in the economy. He suggeststhat policies for the sector are thus critical for housing development. Thereshould be a proper linkage between developers and financial institution in thefield of short term bridging finance and real estate information.
He alsoemphasizes the bridge between formal and informal organization. Finally, heconcluded that resource mobilization, combined with efficient intermediation,has become the key ingredient of an effective financial system. Khurana M.L. (1998)2, in his article titled “The Co-operativeHousing Movement – a Movement for Creating Safer Cities and Improved SocialLife”, stated that the factors contributing to increasing city population are:more jobs, better civic services, employment opportunities, newer familyformation and shift from rural to city centers, thereby making them centers ofproduction and consumption. In such popular cities, comprising the poor, arefound higher unemployment, increased and prolonged welfare dependency, risingcrime rate, problems relating to public health etc. He continued that to tacklethese problems, the governments have to drain out scarce resources fordevelopmental work relating to upkeep of schools, parks, libraries etc, forpromoting societal homogeneity and stability. He also suggested the role ofhousing co-operatives as, apart from providing decent houses to its members, itis to create an environment that is conducive to the fulfilment of thephysical, social, economic and spiritual needs of the members.
He concludedthat housing co-operatives have the potential of becoming an effectiveinstrument of providing an improved social life and making cities safer abodesof human existence. Madhusdhanan.V (1998) 3, in his study “State Intervention in Housing– An evaluation of policy and its impact on the socially marginalized inkerala” concentrated on the part playedby governmental and non-governmental agencies in mitigating the housing problemespecially the weaker sections of society in Kerala. He also analysed thedifferent housing schemes and policies implemented by the government andevaluated its impact on the socially marginalised people in the state. Paul Diamond.
T (1998)4, in his study “Role of Housing Finance Institutions in National Housing” evaluatedthe housing shortage in the country and suggested the role of the HFIs innational housing. His suggestions include: introducing flexibility in designingproducts and systems, development of mortgage market and development ofsuitable products to satisfy wide range needs of borrowers (product range). Healso emphasized the governments’ role as facilitator by creating an ‘enabling’environment to remove constraints in housing activity and expand basic servicesto support standardization and up gradation of the housing stock.Avadhani V.A. (1999)5, in his study, “Marketing of financialservices”, describes the institutional set up of housing industry, whichconsists of NHB as the apex institution, HDFC, HUDCO and Banks.
The housingfinance policy aspects, industry background, sources of funds, market forhousing finance, recent developments and regulation of HFCs are highlighted byhim. The novel method of raising funds by HFCs i.e., securitisation, is alsodealt with.Dangwal R.
C. (1999)6, in his article, “Housing Finance in India:Myth and Reality”, evaluated the performance of various financial institutionsand their different housing finance schemes and assessed the further need offinance in order to fill up the gap between the demand and supply of housing financein India. He arrived at the following conclusions: -a) The specialscheme designed to provide housing finance at low interest rate (4 percent) toSC and ST population by HUDCO was a good effort, but the fund allocation to itwas negligible. b) Though theprivate sector is dominant in housing finance, it has not measured up to thechallenges of demand and need.
c) Housing is not aproblem for rich, it is a problem of economically poor and middle classfamilies and the strategy has to be formulated in consideration of the poor,and separate allocation of funds should be made for the poor. Sivalingam.T (1999)7, in his work, “A Study of the Performance ofMulti-Agency Housing Finance Institutions with particular Reference to HDFC,LIC and Housing Co-operatives”, analysed the different loan schemes of HDFC,LIC and Housing Co-operatives. He also analysed the performance of the formalhousing finance institutions. He concluded that the proportion of investment inpublic sector housing has declined while the same in the private sector hasincreased. A beneficiary analysis was also made to elicit the perception of theborrowers about the performance of the institutions. His main finding was thatthe borrowers of all the three housing finance institutions were not satisfiedwith regard to the rate of interest charged by them.
Further, he observed thatthe behaviour of the officials of the housing co-operatives was notappreciable. Gireesh kumar G.S. (2000)8, in his study, “Primary Housing Co-operativesin Kerala – An Evaluative Study”, assessed the financial performance of PHCs inKerala and evaluated their effectiveness in granting housing loans to members.He also analyzed the views of member beneficiaries and managerial personnelwith regard to the various aspects of housing loan and examined the problemsconfronted by PHCs. He suggested implementation of professionalism inmanagement and reduction in the proportion of share linking. Hendershott et al. (2000)9, in their study, “Household leverage and thedeductibility of home mortgage Interest: Evidence from U.
K house purchasers”, examinedthe impact of phasing out of home mortgage interest deduction from taxableincome for home buyers on borrowers’ decision on the amount of debt they werewilling to take. The study is based on a sample of 117,000 home loans in the UKover the period from 1988 to 1998. The researchers found that removal ofinterest deductibility resulted into borrowers reducing the initialloan-to-value ratios and that this effect varied with household age, loan size,and tax bracket.Koshy George (2000)10, conducted a study “Housing Finance for theSalaried Class in Kerala and Its Impact on the Development of the State” amongthe salaried class in Kerala and examined their house construction activities,and the proportion of their investment in housing. He examined the socio-economicimpact due to the drainage of funds to other states in respect of employinglabourers from other states and importing building materials from other states.
This drainage has affected the economic development of Kerala to a greatextent.