Affordable Housing in India

Definition: Affordable Housing refers to housing units that are affordable by that section of society whose income is below the median household income.

Description: Though different countries have different definitions for affordable housing, but it is largely the same, i.e. affordable housing should address the housing needs of the lower or middle income households. Affordable housing becomes a key issue especially in developing nations where a majority of the population isn't able to buy houses at the market price.

Disposable income of the people remains the primary factor in determining the affordability. As a result, it becomes the increased responsibility of the government to cater to the rising demand for affordable housing. The Government of India has taken various measures to meet the increased demand for affordable housing along with some developers and stressing on public-private partnerships (PPP) for development of these units.

Affordable and Low-cost housing are often inter-changeably used though a subtle difference exist between these two terms. Low-cost housing is intended to cater to the bare minimum housing needs of the Economically Weaker sections of the society whereas, Affordable housing is meant for the Lower-income (LIG) and Mid-income group (MIG) and includes basic amenities like schools, hospitals and other such community services.

Challenges faced by this Segment

• Affordable Land
• Excessive control on Development of Land creates artificial shortage
• Lack of Marketable Land parcels
• Lengthy approval & Land Use Conversion Process
• Titling issues and Lack of Information
• Affordable Materials, Labor, Design & Technology
• Affordable Finance

Parameters	Affordable Housing
Amenities	Basic
Target Income Level	LIG & MIG
Location	Within city
Project Developer	Government & Private Developers
Source of Finance	Banking & Housing Finance

Source: Credit Suisse, KPMG Analysis, Prop Equity

SIZE		EMI
EWS	Minimum of 300 sqft of super built-up area Maximum of 269 sqft (25 sq m) of carpet area	Not exceeding 40% of gross monthly income of buyer
LIG	Minimum of 500 sqft of super built-up area Maximum of 517 sqft (48 sq m) of carpet area
MIG	600-1200 sqft of super built-up area Maximum of 861 sqft (80 sq m) of carpet area

Source: Guidelines for Affordable Housing in partnership, MHUPA 2011

Housing Shortage in Urban India

	Monthly per-capita Expenditure	Estimated number of Households (2007)*	Housing shortage in million (2007)	Percentage Shortage
EWS	< 3300	21.81	21.78	99.90%
LIG	3301 – 7300	27.57	2.89	10.50%
MIG	7301 – 14500	16.92	0.04	0.20%
HIG	14501 and above
Total Shortage		66.3	24.71	37.30%

Source: Report of the Technical Group (11^th Five Year Plan: 2007-12) on Estimation of Urban Housing Shortage

Multitude of Statutory Approvals adds 2-2.5 years to the pre-construction process