Even 78 years after independence, we have failed to provide shelter to all and create living spaces that are accessible and affordable to people across income groups and social categories. Clearly, inclusive housing is still a distant dream as we are not able to provide access to safe, affordable and dignified housing to all , for ensuring equitable urban development. As India makes rapid strides in urbanization with 40% of the population set to be living in cities by 2030, the need for inclusive housing becomes all the more important.
Despite the Modi government making great efforts, their flagship programme of 'Housing for All' is still far away from achieving its desired goal, amidst the current shortage of about 2.9 crore housing units. Besides, we are facing a serious problem of urban sprawls with a large population still living in slums, bereft of basic civic amenities.
The major aim of the 'Housing for All' programme is to promote inclusive housing by particularly addressing the needs of middle-class and economically weaker sections of society through Pradhan Mantri Awas Yojna (PMAY) . However, it is ironic that today most of the housing shortage is in the Low Income Group (LIG) and the vulnerable EWS (Economically Weaker Section) segment. This in turn is adversely impacting inclusive housing.
In the recent years, we have seen a continuous decline in affordable housing. And today we find that premium and luxury housing is getting promoted at the cost of affordable housing as real estate developers are preferring to push supply of high-end housing to meet the rising demand. It is another matter that some of this demand is artificially created through bulik buying by short- term investors. Moreover, for developers ,there is a lure of high profits in this segment, compared to thin margins in affordable housing.
The demand for affordable housing and mid-priced housing has gone down in key cities amid high prices as there's hardly any new supply in this price-sensitive segment. There's an average housing price increase of over 50% since 2020, with NCR cities of Gurugram and Noida witnessing over 150% increase and Bengaluru recording about 100% price rise. Anarock data shows the share of affordable housing sales to the overall housing sales has gone down to almost 20% from 40% in 2019 amid weakening affordability and supply squeeze. The share of affordable housing supply to the overall housing supply, has decreased by more than half, from 40% to 16%.
Besides non-availability of affordable housing stock, the problem of middle-class homebuyers has been further aggravated as affordable inventory is available at bad locations with poor connectivity and without proper amenities. The poor connectivity leads to longer and costly commutes. Further, the discontinuance of interest subsidy for first time homebuyers under PMAY, for one year also negatively impacted the demand for affordable housing. Though the interest subsidy has been restored, but it has been reduced from INR 2.67 lakhs to INR 1.80 lakh.
Today, due to high land and construction cost, affordable housing is facing major challenges in key cities and their suburbs and there is an urgent need to reverse this trend. Real estate industry bodies like Credai and Naredco have asked for more effective incentivised policies to boost affordable housing. These include subsidised land to develop affordable housing, upward revision of price cap (INR 45 lakhs) of affordable homes, bank funding at lower interest rates for the developers of affordable housing and lowering taxes and compliance costs.
Rental housing can play a significant role in addressing the severe shortage of affordable housing. and ensure housing inclusivity.The Centre has taken reform measures by way of Model Tenancy Act & Affordable Rental Complex (ARHC) scheme of 2020 to boost rental housing and provide dignified living to urban migrants and poor workers close to their workplace by offering incentives to the private sector. But these policy initiatives have so far shown limited impact due to tardy implementation by states .Promoting affordable housing along expressways, rapid rail transit systems and metro lines, utilising ideal PSU land for developing budget housing and redeveloping slums and old low-rise residential societies into modern high-rise residential developments, are the other important initiatives which may contribute significantly to bolster affordable housing. Further, greater collaboration between private developers and government agencies through PPP for developing affordable and rental housing by offering incentives to developers, may well support the mission to achieve the goal of inclusive housing.
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