The Indian property market is anticipated to touch the USD 1-trillion mark by 2030, with affordable housing playing an impactful role. With a population that has been surging at a rate of 2.1% on an average every year and the low purchasing power of a noteworthy share of this population, meeting the demand for 40 million urban housing units seemed like a tremendous task at one point of time.
Factors that have given a boost to affordable housing
However, things have transformed in the last couple of years, with the government making some welcome announcements to push budget housing. There are a number of aspects that have helped growth – the entry of several reputed real estate players keen on exploring at this profitable sector, speedy urbanisation, the emergence of nuclear family concept and the increasing income levels of the population.
The government’s decision to grant an infrastructure status to the affordable housing segment in India has further stimulated this segment, encouraging participation from a wider community of investors. Furthermore, the government has been constantly making continuous efforts to advance the affordable housing segment through various welcome initiatives like the credit-linked subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY). These positive efforts are definitely giving a much-needed push to this segment.
While the mission of providing housing to each and every individual is practicable across the country, the scenario in the MMR is a tad diverse from other metropolitan cities. Due to the city’s unique geography, the government needs to take additional efforts, to make affordable real estate a reality in Mumbai. However, there is still a substantial supply scarcity in this segment with more people looking to invest in the urban areas, where the emphasis has been on high-value properties. To comprehend what needs to be executed, it is important to know the challenges that can make affordable housing a far-fetched reality.
Affordable housing in the MMR: Challenges
High land valuation: Highly constrained by floor space index (FSI, also known as floor area ratio) rules, inadequate master-planning and time-consuming approval processes, Mumbai offers residential land at a very high cost. Adequate infrastructure needs to be formulated to supplement the high demands coming from affordable homes in semi-urban locations.
Enhanced policy support: In order to aid the sector’s revival, the government needs to initiate policy measures like the introduction of single window clearance, exclusion of Rs 45 lakh limit for affordable homes and condensation in charges and cess on realty projects in the MMR.
Rising cost of raw materials: With rising raw material cost, housing prices too have been increasing, which is one of the main challenges faced by affordable housing. This is because higher property prices directly affect the buying capability of low and middle-income groups.
While the property market is on an upward trajectory, affordable homes segment is growing at the fastest speed. The government initiatives and efforts to boost the sector has further played a crucial role. If the above-mentioned pain points are effectively addressed, the industry will certainly witness a lot of action in this housing segment. The growth of affordable housing clearly indicates that home ownership will no more be just a far-fetched dream; it is definitely slated to become a reality for many Indian families in the forthcoming decade.