Affordable housing – out of reach?

The affordable housing market is evolving but it has its share of problems.Issues like land availability,pricing,finance and regulatory concerns have affected the supply of affordable houses.
According to NUHHP (National Urban Housing and Habitat Policy) 2007,an affordable house is defined as,”a dwelling unit having super built-up area not less than 300 sq ft for EWS (Economically Weaker Sections),500 sq ft for LIG (Lower Income Group) and between 600 and 1200 sq ft for MIG (Middle Income Group) available to the end user at a price that permits home loans in monthly installments,which should not exceed 30% – 40% of a person’s monthly income.

“However,affordable housing continues to be an elusive dream,especially for those in the EWS and LIG categories.Why is there a problem in terms of supply and implementation of affordable housing schemes P Suresh, MD, Arun Excello, believes that the biggest impediment to construction of affordable housing projects is the non-availability of land. He says, “It is impossible to find land at appropriate locations at affordable prices.Where can you find land at a cost of less than 1 crore per acre.  This is a big deterrent as land price accounts for more than 40% of the cost of the project.”It’s not just availability of land that we are talking about here. As Kumar Gera,Chairman,CREDAI (The Confederation of Real Estate Developers Association of India) points out,”Well-connected,accessible land with title and infrastructure needs to be provided on a regular basis. Only then can developers provide affordable housing in the real sense of the  word.”

In cities,in particular,land availability is a bigger problem. According to a report by McKinsey Global Institute (MGI),India’s urban population will soar from 340 million in 2008 to 590 million in 2030.How will the housing demands of the population be met with Sample this: 23% of India’s urban population resides in eight cities.If the housing shortage (of 26.53 million housing units) is to be addressed effectively,at least three million housing units must be added to the cities,every year.Instead,only 0.3 million housing units are being added in the existing cities.Urban land expansion is,therefore,the need of the hour.
As per the estimations given in the Second Master Plan,of the total housing demand of 12.38 lakhs,the demand for EWS and LIG housing will touch 3.71 lakhs and 4.33 lakhs respectively by 2026.More than 90% of those affected by the shortage in housing are from the EWS and LIG categories,for whom an affordable house would fall in the range of 4 lakhs to 7.5 lakhs. Most developers however continue to cater to the niche market that serves about 5-10 % of the population. As P Suresh points out,”Promoters are averse to handling more number of clients;in an affordable housing project,for instance,it’s a volume game. You need to provide a large number of housing units,as opposed to a luxury project where you deal with very few clients and big spaces.”
Coupled with this is the problem of financing affordable homes.To offset this problem and deliver financial assistance to the poor so as to enable them to purchase their own homes,the Central Government has instituted the ISHUP (Interest Subsidy Scheme for Housing the Urban Poor) scheme all across the country.”This scheme gives EWS households a subsidised loan for a period of 15-20 years for a maximum amount of 1 lakh. LIG households can avail of a loan of upto 1.6 lakh but the subsidy is not applicable for the remaining 60,000.The subsidy is 5% pa on interest charged and is deducted from the loan quantum right in the beginning,”says Dharmendra Pratap Yadav, Managing Director,TNHB.

Times of India epaper, 27 November 2010