It is an established fact that the real estate industry is the heart that drives a country’s economic progress. A relatively new fact is that affordable housing is the oxygen that can keep the sector running. As suggested in the name, affordable housing generally refers to housing that is deemed reasonably priced for those with a household income at or below the median rated by the government-recognized housing affordability index.
In India, which has the largest population of middle and low-income households in the world, affordable housing can be a key source of tax generation, employment, and increasing the spending power of consumers in the economy. For the real estate players it is a tremendous business opportunity with a huge number of buyers but hardly any real estate developers. It would be a profitable scheme if an increasing number of developers shift the focus from deriving margins from a few high-end luxury projects to the voluminous demand for low-cost housing. Moreover, the cost of developing affordable housing is at least 25 percent lower than high-end projects which again is an attractive proposition for the developers.
At the same time, affordable houses offer more business stability in terms of price as it is directly for the end-users. Most significantly, this segment has the support of the government. The union government policy is one of the main catalysts behind the rapid demand for low-cost housing and propelling the development of the real estate industry. The government’s decision to grant infrastructure status to affordable housing well as bringing it under the ambit of initiatives like the credit-linked subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY) has attracted a wide array of both public and private investments into the segment.
Finance Minister Nirmala Sitharaman this year has allotted Rs 48,000 crore for PMAY under the Union budget. In 2022-23, 80 lakh houses are targeted to be completed for identified beneficiaries of PMAY while 60,000 houses will be identified as beneficiaries for the scheme in rural and urban areas. Advantages of affordable housing extend beyond the development of the real estate sector to other sectors too as it helps retain and attract workers from across the country. Barring the pandemic years, several factors have helped accelerate the low-cost housing segment recently – the demand by households, entry of new as well as credible real estate developers, government aid, rapid urbanization, and higher wages.