The present dichotomy between the formal and the informal housing finance sector in Kerala needs to be removed and linkages between the formal financial institutions and informal local networks must be established and strengthened. The ultimate objective should be to bring a large proportion of the beneficiaries of informal housing finance system within the network of formal financial institutions, so as to facilitate the development of total housing activity at a more economical cost than those prevailing in present times.

With the astronomical increase in land prices and the increasing cost of building materials, housing has become very expensive; thereby limiting the affordability of market related housing finance for economically weaker sections and the lower rungs of middle class. It has been estimated that the house price to annual household income ratio on an average is 6.2, which is well above the average of 5.25 for developing countries.

A number of initiatives other than that for ensuring availability of finance on time are, therefore, called for from the part of the government in order to facilitate the desired growth of housing activities. These include inter alia, efforts to promote larger availability of land, augmentation of urban infrastructure particularly water supply, sanitation and community facilities, simplification of procedures for creation of mortgage, registration of documents and loan recovery proceedings, encouraging use of low cost building materials and adoption of simple appropriate technology.

The magnitude of shelter problem is immense, since the efforts made so far have not been commensurate with the requirements and demand. The government alone cannot cope with this problem; nor can the private efforts of the leading builders in Kerala. What is required is a coordinated approach by both the public and the private sector including the cooperatives for accelerating housing investments through development of a sound and healthy housing finance system.