What is affordable housing?
Affordable housing typically addresses the housing needs of the lower or middle income population. Affordability is primarily measured by the disposable income of the people. In Indian cities especially Mumbai, Delhi, Chennai, Bangalore etc. majority of the real estate units remain unaffordable for the section of the society with an income below the median mark. Current Government is taking various measures to meet the increased demand for affordable housing which in turn encouraging the developers to look toward this segment with renewed interests.
Upon realization of the importance of affordable urban housing, The Government of India is taking a number of initiatives in this direction. Large-scale residential projects, townships are being planned aside the ambitious ‘Smart Cities’ project for developing the entire urban eco-system.
To fulfill its mission ‘Housing for All by 2020’, Government has taken a number of steps. Prime Minister Narendra Modi announced reduction in interest rates by 4% on bank loans for property below 9 lacs and 3% less on 12 lacs as per Awas Yojana, on 31st December, 2016. Post demonetization, major banks like SBI, ICICI, HDFC have cut their lending rates by up to 0.9%.
Government of India also proposed infrastructure status for affordable housing which will cheer up the developer community to take up more affordable housing projects to facilitate Government’s vision.
Gone are those days when every real estate developer would go after luxury and premium segments owing to the big margin they offered. The Government’s initiatives and the changed sentiment in the market thanks to demonetization and implementation of RERA have given an altogether different perspective to the real estate scenario of India. The boost in the affordable housing segment alongside the benefits and backing from the authority are ensuring that the developers gain confidence about the reformed scenario and shift their focus to the segment which is going to flourish in the next decade or so.
Earlier this segment was somewhat neglected by a group of developers because of its own set of problems such as lack of land for large-scale developments, higher construction cost and lower margin. We are certainly moving toward a direction where these problems reduce to a good extent.
The results are already showing; budget housing projects have not seen any significant slowdown whereas luxury project launches saw a beating in the momentum and will likely remain moderate in 2017 as well – experts think.
Affordable housing has got a face-lift in Budget 2017. The Government has announced infrastructure status to affordable housing which is an encouraging thing for the middle class as it will make homes spacious and cheaper. Also, the demand for affordable housing is set to increase owing to the proposed 5% deduction of the income tax rate for taxpayers earning less than Rs 5 lakh.
As a growing segment of India’s population is starting to do well financially it’s evident that more and more decent living options would be required and that will bring considerable pressure on the existing infrastructure. Constant demand will surely pull the developers to invest more in this sector and that in turn will help common men like never before.
High on affordable housing
A number of developers are entering into the sector; many of them are brands who were earlier largely into luxury segments. Oberoi Realty, Lodha, Prestige Group are the prominent developers who are venturing into the segment. Palava, located at the outskirt of Mumbai remained one landmark affordable housing project by Lodha. Kolte Patil, Sunteck Realty are the other developers who are entering into the affordable segment in places like Mumbai, Pune and Bengaluru. Mahindra Happinest, Tata Value Homes, Haware Properties, Karrm Infrastructure are among the old brands in Mumbai market who have already made marks in the affordable housing segment.
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