DELHI: The government has set an ambitious agenda to boost affordable housing in the country, including the metro cities and larger towns. But even several years after making its policy intention clear, the segment has lagged behind its potential. The supply of affordable homes has not been able to keep pace with the demand.
As per a report from KPMG, the shortage is estimated at 18.78 million households in 2012. Housing shortage in the urban areas is prominent across the economically weaker sections (EWS) and low-income groups (LIG), which together constitute over 95 per cent of the total housing shortage.
The affordable housing projects launched by private developers have significantly contributed to the 25 per cent decline in urban housing shortage in the last five years (2009–2012). However, this is not enough as we still have a gap of 18 million homes to plug. This is considering that the performance of the real estate industry in the country has more or less kept pace with the growth targets and expectations.
To address this acute shortage of affordable housing for the low income groups, the central government has come up with a draft policy that it hopes will pave the way for allotment of low-cost houses to EWS and LIG. The draft policy, which has been sent to the states for their feedback, will allow households with an annual income of up to Rs 2 lakh to apply for subsidised houses. Such low-cost houses, with a proposed carpet area of 21-27sq m and 28-60sq m respectively for LIG and EWS categories, would be developed in partnership with either state housing boards or private developers and are estimated to cost Rs 4-10 lakh. The houses will be sold by the developer/housing boards at rates fixed by the states, while beneficiaries will be selected through draw of lots.
This is a welcome step and a good opportunity for private developers to make the right move and take advantage of the huge demand-supply gap in affordable housing market. The icing on the cake will be if the government was to implement a single-window clearance system for affordable housing projects.
Reports estimate that delay in project approvals can increase cost by 25-30 per cent. Considering the low-ticket size, private developers cannot afford procedural delays and this cost cannot be passed on to the end user. This would, in turn, be the beta testing of the single window clearance system for real estate projects, a long-standing demand of the real estate industry.