Chennai: Affordable housing, once accounting for nearly half of India’s residential property sales, has shrunk dramatically to single digits over the past few years, highlighting growing affordability concerns in a country that still faces a housing shortage of nearly two crore units. Restoring PMAY incentives, unlocking unused government land, speeding up project approvals through a single-window system, and offering concessional finance is needed to revive the segment.
According to Prashant Thakur, Executive Director and Head of Research and Advisory at Anarock Group, the share of affordable housing in overall residential sales has plunged from around 45 per cent in 2019 to just 9-10 per cent today, even as premium and luxury housing continue to dominate new launches.
“The overall residential market has grown significantly after the pandemic, but that growth has largely bypassed affordable housing,” Thakur said, attributing the decline to a combination of rising construction costs, expensive land, withdrawal of government incentives and changing consumer preferences.
The Pradhan Mantri Awas Yojana (PMAY) had played a crucial role in boosting both demand and supply in the affordable housing segment by offering interest subsidies to buyers and tax incentives to developers. However, the discontinuation of several incentives over the past two years, coupled with a sharp rise in construction costs, has made affordable housing projects economically challenging.
Developers have increasingly shifted their focus towards premium and luxury housing, where margins are higher and demand has remained resilient. While demand for affordable homes still exists, rising land prices and escalating construction costs have made such projects financially less attractive, he said.
Thakur also pointed to stagnant income growth among lower- and middle-income households. House prices have outpaced wage growth over the past few years, reducing affordability for first-time buyers. Although property prices are expected to stabilise and rise by only around 3-4 per cent annually in the coming years, affordability remains a major concern for households employed in the informal sector and small businesses, many of whom are yet to fully recover from the pandemic.
He argued that the government would have to intervene more aggressively if it hopes to achieve its “Housing for All” objective. Besides restoring PMAY incentives, he suggested unlocking unused government land for affordable housing projects, introducing a single-window clearance mechanism to shorten approval timelines, and providing concessional finance to developers.
Thakur also stressed the need for India to build a stronger rental housing ecosystem, noting that home ownership should not be the only policy objective. “A robust rental housing system can also fulfil the objective of Housing for All, and India lags behind many developed countries in this regard,” he said.
Real estate currently contributes about 7 per cent of India’s GDP and is the country’s second-largest employer after agriculture. With urbanisation accelerating, Thakur expects the contribution of the overall real estate sector, which includes data centres, commercial and office segments, to rise to 13-14 per cent by 2030.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
