Affordable Housing: Reality or just a Utopia?


Ever since the Modi government announced the ‘Housing for All by 2022’ mission, affordable housing has managed to grab eyeballs from the industry stakeholders.

With global economic meltdown, it won’t be appropriate to say that Indian property market has remain untouched. A slowdown in Indian realty market is currently being seen which has led analysts predict a 25-40% downslide in property prices. However, builders and developers are denying any price cuts; they’re rather firm on further price escalation. In such a scenario, ensuring housing for all seems a debatable issue.


However far-fetched the affordable housing dream may seem, it’s not an unachievable task. A lowdown on various factors attached to this kind of housing could certainly provide a clear picture of why Modi’s ambitious dream project is not an impossible task at hand.

Reduction in land cost

A major hurdle in achieving the affordable housing dream is the ever-burgeoning land prices. Builders and developers have come to the forefront explaining to the governments that why bringing down land prices is crucial to attain the ‘Housing for All’ dream. Land is an expensive resource to the builders which further makes the home prices high, thus affecting the homebuyers who need to shell out more money. End-users are the worst-affected, as most of them are first home purchasers. Hence, it could be stated that reducing land prices is the first and foremost step towards achieving affordable housing dream. Also, government should look to unlock land parcels currently being held by state-run units. These could be the port trust land, railway land, as also salt pan land.

Rationalisation of taxes

Another solution that could bridge the affordability gap is rationalisation of taxes. Builders and developers are liable to pay a number of taxes that increases the overall cost of any given project, and the burden is finally passed on to the consumers. For the sake of consumers’ interests at large, government needs to work upon revision of taxes.

Speedy approvals and permits

Each of the homebuyers must have come across a situation wherein the possession of their purchased flats has been delayed. A major reason cited for such a situation is the delay in getting timely requisite approvals and permits. Getting the building plans approved is quite a daunting task for all the builders and developers, as the process gets delayed due to prevailing red tapism and corruption in the system. Constructions thwart due to this, and the construction costs escalate steeply – another reason to burn a hole in the pockets of homebuyers. Industry stakeholders are firm on a single window clearance to speed up construction, which means bringing down the construction costs, and thus making housing affordable.

Use of technology in construction

As prices of construction materials such as cement and sand are skyrocketing by the day, a major cost that every builder and developer incurs is the construction cost. Infusion of technology with construction is the way to go to see a dip in construction costs. Many builders and developers across the country have switched from normal mode of construction to precast technology. Countries like China have adopted 3D printing, and have managed to build houses within few days. If India manages to use 3D printing full-fledged for construction, then it would be able to overcome its current housing crisis.

Compact-size housing

Exclusive residences bear a cost. In major urban centres, where luxury is also defined by space, downsizing apartments has become the one-stop solution for affordability.

Developing the peripheries

Major developments have already occurred within the cities. Property prices in these developed centres always witness an upsurge.  Builders and developers are thus choosing the peripheral areas of cities for their new projects wherein land is quite affordable. Land parcel availability is also a major driver of housing development in these areas. However, lack of infrastructure and connectivity has stunted growth of peripheries. Government must work towards building better infrastructure in these areas, and also improvise connectivity to main urban centres and business districts with the help of mass rapid transit system. Transit oriented development is the sure shot way of enhancing connectivity, and thus leading to growth of urban centres.

Innovative financing tools

In the current real estate scenario, whenever financing to builders and developers is mentioned, traditional banking channels have been replaced by private equities and non-banking financial companies (NBFCs). Developers are insisting on foreign funding to boost affordable housing. Foreign Direct Investment (FDI) can be an effective tool to deal with the financial crunch that builders are facing today. Besides, crowdfunding can also be looked at one of the efficient financial tools. Equity crowdfunding has emerged successfully in the West, and the same could be aped in India too.

Don’t build premium

Builders and developers have restrained themselves from venturing into affordable housing segment as the profit yield is quite marginal. They’ve been building premium, luxurious houses with best-in-class amenities indoors as well as outdoors. Such housing projects are equipped with luxuries like swimming pool, clubhouse, gymnasium, recreational centres etc. This further increases home prices, and hence housing remains unaffordable to most except a privileged few. Developers should utilise the land available to them to create housing for consumers at large. Recreational facilities could be a part of the building itself rather than using a large land parcel for the same. Rooftop gardens ensure open, green spaces within the housing complex.

Challenges and opportunities are abundant when it comes to building affordable housing in India. However, it’s a must that governments and private parties work in collaboration and co-operation to ensure PM Modi’s ‘Housing for All by 2022’ dream becomes a reality.