Affordable housing in India unfolding a new era of growth
The affordable housing segment is likely to grow by around 30 per cent over the medium term in India. The big cities in India have seen a massive rise in affordable housing projects from past two years. With low interest rates and various policies in place from government, the demand for affordable housing in India has increased and development firms are now looking into this segment with keen interest.
This segment was considered to be a low profit segment in the industry, as a result, the developers used to take a back seat when it came to affordable housing in India. The biggest step in this direction came from government by taking the initiative of “Housing for All” by 2022. Demand for home loans has increased considerably with these steps. The housing costs have also been reduced by access provided to cheaper funding by way of debt. Developers have entered into this segment with infrastructure status given to affordable housing, which is an added advantage.
With government’s subsidy schemes boosting the segment, some builders are tweaking the size of units to make them affordable for availing benefits. The rates of housing will be reduced with the implementation of GST by decreasing the tax rate from 12 per cent to 8 per cent as has been suggested in some quarters. With a numbers of schemes launched by government, the availability of land in cities still remains as the biggest challenge for budget housing. The land is available only in the peripheral area. People living there will have to spend time and money to travel to their work places.
However, the government is hopeful of combating this situation by freeing up the land. There is a potential of freeing up land in many cities, which is unutilized because of various reasons. With the kind of attention affordable housing is getting from the government, the developers and common people are showing a lot of interest in this segment. But one thing that needs to be seen is whether this segment can become the largest segment in residential real estate.