A fter recognising India’s massive housing gap, the Union government had announced the ‘Housing for All by 2022’ project in July 2015. It was aimed at achieving the staggering target of bridging a gap of more 1.9 crore houses. Over 96% out of these are required for the Lower Income Groups (LIG) and Economically Weaker Sections (EWS) groups.
In India, while the population is growing at more than 2.1% every year and may touch 1.51 billion by 2030, growth in housing has been unable to keep the same pace. The central and state governments are now contemplating many ways and means to provide access to housing for all.
Affordable housing will not only fill the housing gap, but will be the next major economic growth driver by creating more than two million jobs by 2022.
Fresh initiatives
To fill the massive gap of affordable housing in India, the government has come up with a spate of many initiatives:
- To encourage the PPP (Public Private Partnerships) module which can amplify affordable housing, the Union Budget 2016-17 announced that developers would be exempt from paying tax on profits in this segment for five years starting 2016
- The Government has increased the time limit to complete affordable housing projects from 3 to 5 years. Now, developers will have more time to complete affordable projects
- t=The budget allocation under Pradhan Mantri Awaas Yojana has been raised from from ₹15,000 crore in 2016-17 to ₹23,000 crore in 2017-18
- The National Housing Bank, which is a subsidiary of RBI, has announced that it will refinance individual housing loans worth ₹20,000 crore in 2017-18
- Affordable housing was given the vital infrastructure status in the union Budget 2017-18. Now, developers will have diverse and cheaper sources of funding, including External Commercial Borrowings (ECBs)
Financial subsidies
To promote affordable housing, the Government has announced several financial schemes to make housing loans in this segment cheaper:
- A 6.5% subsidy on interest on housing loans up to ₹6 lakh can be availed for 15 years
- Government assistance of ₹1.5 lakh is extended for each beneficiary under EWS & LIG
- A 4% and 3% subsidy on interest for loan amounts of ₹ lakh and ₹12 lakh respectively
- The Government is mulling the waiving Stamp Duty charges and reducing their impact
- The middle-income group (MIG) of buyers with annual incomes above ₹6 lakh to ₹18 lakh is also included in the interest subsidy
Top cities
The affordable price segment dominated the residential units supply in H1 2017. The recent new launches trend shows that demand for affordable housing with ticket sizes in the ₹5 lakh to ₹40 lakh range is continuously growing. During the first half of 2017, the top cities (Bengaluru, Chennai, Hyderabad, Mumbai, Delhi-NCR, Pune and Kolkata) recorded more than 60% of total residential units supply.
The majority of projects in the affordable housing segment were launched in the peripheral boundaries of the top cities, largely due to non-availability of contiguous land parcels for large-scale mass housing developments and sky-rocketing property prices in the central locations of our cities.
In H1 2017, the share of the affordable segment in new launch supply increased by 16% over the second half of Year 2016. On the other hand, the mid and luxury segments witnessed a decrease of 4% and 9% percent respectively in the same duration.
The writer is Chairman — Anarock Property Consultants
