India Unveiled | Farm sector leads in homeownership

India Unveiled | Farm sector leads in homeownership

Mumbai: Rural India continues to spring surprise after surprise. Market research on India’s nascent real estate sector, conducted by Noida-based IIMS Dataworks in its study Invest India Incomes and Savings Survey 2007, shows that homeownership is highest among Indians engaged in the agriculture sector.

Farmers and other agriculture workers account for 37.94% of the homeownership pie in India. The report, which studied homeownership patterns from 1995 onwards, shows that farmers with marketable surplus rank the highest among homeowners in the country, outnumbering even urban professionals and businessmen, at 22.06%—these two other categories form 18.67% and 17.03% of the pie.

The survey states that rural India is witnessing a building boom—68% of all sales and new constructions since 1995 have been in rural India, with smaller towns accounting for 24% of sales and new constructions. Among the buyers, too, it was not the affluent class but those with modest salaries, mostly in the range of Rs90,000 a year, who bought homes.

Interestingly, more than 80% of the homes are self-financed, with home buyers tapping into their savings. Housing loans from banks, lenders and housing finance companies such as HDFC Ltd account for 14% of all home purchases. But self–financing a house may not necessarily mean a completely debt-free property. In 1995, Vanmali Rathod, a marginal farmer who owns a few mango groves on a few acres, built a large house for his extended family in Billimora village, Gujarat.

Today, he wants to sell the house to settle his debts. “I have been in debt for so long and have spent most of my life paying off the debt," Rathod says. “I would prefer to sell my house if I could a find a buyer."

But Rathod may not find the valuation of his property encouraging if he puts his house on the market. IIMS data indicates that people working in the agriculture sector were among the last to profit from the property boom of the last few years. The data shows that perceived asset values of rural properties rose, on an average from Rs1.7 lakh to Rs3.2 lakh only, while urban professionals and salaried employees said they perceived the rise in their asset to be an average of Rs23.9 lakh from Rs11.9 lakh.

Rathod is well aware of the disparity. “I wish I had invested in the stock market instead. My money would have doubled by now," he says. There’s a shortage of 19.4 million housing units in India—6.7 million in urban India and 12.7 million in rural India.