Affordable Housing is Keeping India’s Real Estate Afloat

Insufficient housing is a global problem. Statistics show dismal figures — one in five people suffer from inadequate housing, and a mere 13 per cent cities offer affordable housing options globally. While the housing situation in India is no different, real estate developers and the Indian government have turned their focus on affordable housing projects, which have begun to reverse the trend of insufficient housing in India — slowly, but surely.

The pandemic too has played an important role in fuelling demand for affordable homes. Before the pandemic, 31 per cent of India’s urban population lived on rent and a large chunk of this segment now aspires to have a house of their own.

After the first wave, companies gave their employees flexibility to work from home, which resulted in many people rushing to their hometowns. After the second wave, with hybrid work models being toyed, people are keen on finding a house of their own. Low interest rates offered by banks are another factor that is aiding this trend.

India has a massive population that is spread across urban and rural areas. In order to meet the demand for affordable housing, many initiatives have been kickstarted in the past few years.

Housing for All Mission, 2015

Launched in 2015, the Housing for All Mission is Government of India’s initiative to create affordable housing spaces for the economically backward living in urban zones. Under it, the government aims at providing two crore affordable homes to the urban poor by the end of March, 2022.

In order to sweeten the deal and make it easier to achieve the goal, the government is offering a number of subsidies. One of these is a reduction of GST rates for affordable housing. For homes priced below Rs 45 lakh, the applicable GST rates have been reduced from 8 per cent to 1 per cent.

Pradhan Mantri Awas Yojana, 2015

Better known as PMAY, the Pradhan Mantri Awas Yojana was also launched in 2015 under the Housing for All Mission. With the aim of achieving adequate and affordable housing for the urban poor, this credit-linked subsidy scheme offers an interest subsidy to those applying for a home loan under PMAY.

• PMAY-U or Pradhan Mantri Awas Yojana Urban covers more than 4,331 cities and towns. Affordable Rental Housing Complexes (ARHC) is part of this initiative catering to migrants living in urban areas and working in informal sector industries. 
• PMAY-G or Pradhan Mantri Awas Yojana Gramin used to be Indira Awas Yojana till it was renamed in 2016. Under it, a whopping 1,03,01,107 homes have already been sanctioned in rural areas.

Special Window for Affordable and Mid-Income Housing Investment, 2019

SWAMIH or Special Window for Affordable and Mid-Income Housing Investment was launched by the Centre in 2019. Under this investment fund, a handsome sum of Rs 25,000 crore was earmarked to finish stalled RERA mid-income and affordable housing developments. The SWAMIH investment fund is directed at completing the construction of more than 1,500 projects with over 4.5 lakh stalled homes across the country. Non-performing and insolvent assets receive funding on LIFO (Last In, First Out) basis under the SWAMIH fund.

While government initiatives are driving attention to the affordable housing segment, real estate developers are also responsible for making sure that over 80 per cent of new housing development launches in 2020 were firmly in the affordable segment. These initiatives, along with reduced interest rates on home loans and attractive discounts offered by developers, are turning the global dream of affordable housing into reality in India.

The author is Director, AMs Project Consultants

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