The ever-increasing urbanisation in India has resulted in a paradoxical situation where there is a high demand for affordable properties and an enormous supply of “out-of-budget” inventory. As a result, migrants settling in metros have increasingly started living in slums and squatter settlements. This has, at large, deteriorated the housing conditions of the economically weaker sections of the society. While the skyrocketing prices of land and real estate in urban areas is one of the primary factors contributing to this situation, poor housing stock in the affordable category is to be equally blamed. Fortunately, a number of government initiatives announced of late, including Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Jawaharlal Nehru National Urban Renewal Mission (JNNURM), have incentivised the concept of budget housing in the country. Let’s delve deeper into the market dynamics.
Affordable housing, though at a nascent stage, is fast gaining prominence in the key micro-markets of India. Both central and state governments are contemplating ways and means to provide access to housing for their citizenry. Policy reforms and infrastructure up gradation have all directly or indirectly contributed to the growth in this segment. The Ministry of Housing and Urban Poverty Alleviation has fragmented affordable housing into the following:
1. Economically weaker section: Minimum super built up area = 300 sq ft; minimum carpet area = 269 sq ft
2. Lower Income Group: Minimum super built up area = 500 sq ft; minimum carpet area = 517 sq ft
3. Mid-income group: Minimum super built up area between 600 and 1200 sq ft; minimum carpet area = 861 sq ft
In all the above cases, the EMI or rent should not exceed 30-40 per cent of the gross monthly income of the buyer
Major growth factors
Some major policy announcements by the central government have played a significant role in the growth story of affordable homes. However, another equally powerful reason has been the changing socio-economic landscape of India, i.e., the rise of the middle-class. Rapid urbanisation, shrinking size of households, easy availability of home loans and most importantly, increasing disposable incomes have allowed the middle-income class to invest in real estate. This influx of prospective buyers has also forced developers to cater to the growing demand and to focus on volumes rather than premium dwellings.
Major government initiatives to promote affordable housing in India
In the last one year, all tier-I cities have witnessed a rise of 1-6 per cent in the supply of properties in the affordable housing segment. The majority of the new launches that have taken place have been in the price bracket of Rs 20-40 lakh (except for Mumbai). Realising the benefit and future potential, developers catering to luxury and mid-segment segments have ventured into the world of affordable housing.
According to estimates by the Indian government, the population of India may reach 1.5 billion by 2030 while the number of households is expected to easily cross 100 million mark. The middle-class section of the country is anticipated to double, while the wages are expected to quadruple by 2030. Considering all the statistics and most importantly, the governmental push to provide “Housing for All” by the year 2022, the growth of affordable housing segment in India seems warranted.
The author is chief business officer 99acres.com