The current definition of affordable housing in India may require reevaluation due to its varying interpretation across different regions. Presently, a property is classified as affordable if priced at Rs 45 lakh or less. However, this standard varies significantly between metropolitan and non-metropolitan areas. In metropolitan areas, affordable housing must cost Rs 45 lakh or less with a maximum carpet area of 60 square meters, while in non-metropolitan areas, the price remains the same but the allowed carpet area is 90 square meters.
The luxury real estate sector saw notable success in 2023, whereas affordable housing experienced a decline. The new supply of affordable housing constituted only 18% of the total, compared to 31% in the Rs 40–80 lakh range, 28% in the Rs 80 lakh–Rs 1.5 crore range, and 23% in properties above Rs 1.5 crore. This disparity highlights a need for policy intervention to revitalize the affordable housing sector. Experts are calling for a review of the criteria defining affordable housing to better address the sector’s challenges and stimulate its growth.
What are the changes required?
Sadhav Mishra, Partner and Head of Real Estate says, “A 60 square metre house in South Bombay as compared to a 60 square metre in suburban areas or outskirts of Mumbai city will attract different rates and cannot be subjugated to a fixed cost.” This explains why there is an urgent need to find a solution for the same.
What can be done?
To revive this sector and make the homebuying dream a reality for many, experts believe that the government needs to step up. “Developers cannot do much and are heavily dependent on the government to incentivise them to make the affordable policy commercially lucrative for them. Unless the developers can promote affordable housing, the economics of demand and supply won’t be achieved,” opines Mishra.
