2.5 cr low-cost units may be needed by 2030

Filling the demand-supply gap in affordable housing is going to be a huge challenge in spite of the policy thrust and subsidies being doled out by the government. With the current shortage of 1 crore units in the urban area, it is the EWS and LIG segement that has the maximum shortage. 

As per Royal Institution of Chartered Surveyors (RICS) and Knight Frank report "Brick by Brick- Moving towards Housing for All” released earlier this week this gap is going to increase to 2.5 crore units by 2030. 

The report estimates that by 2030 more than 40 per cent of the Indian population will be living in urban India as against the current figure of 34 per cent, which is likely to create a demand for 2.5 crore additional affordable units. 

An analysis of the demand-and-supply shows, that on an average, nearly 6 lakh homes are required every year in the top eight cities versus  a supply of 2 lakh units per year. 

There is a huge supply gap for urban housing and more so in the EWS and LIG category, i.e. houses with ticket size less than Rs 25 lakh. The demand in the EWS and LIG category is around 3.4 lakh. 

As of July 2019, 8.36 crore  houses have been sanctioned under the "Housing for All" initiative. Construction for 4.9 crore units has begun and 2.6 crore of these have been completed. Given the past trend, additional 1.64 crore houses are likely to be sanctioned by December 2019, making it highly possible to achieve the 1 crore house target by 2022. Projected subsidy disbursement over the next three years for the same is projected at Rs 1 trillion.

Several shortcomings like the  unavailability of urban land for affordable housing and lengthy statutory clearance and approval processes, however, are hampering the urban housing plans.

Availability of easy finanace is another hurdle in meeting the demand for affordable housing in the country. The disbursals of finanace for EWS and LIG segments has seen a drop over the past few months.  “From Fresh disbursals of HFCs and Scheduled Commercial Banks (SCBs), it is evident that the share of EWS sector in new disbursals has come down each financial year from 21 per cent in FY 2013 to just 10 per cent in FY 2018. Moreover, even the share of LIG sector in fresh disbursals has also declined from 39 per cent in FY 2013 to 33 per cent in FY 2018”, mentions the report.

Thus, there is an imminent need to chalk out a road map to fulfill this demand. “In view of this demand the sector has to devise sustainable growth model, with private and public development agencies collaborating to create an ideal ecosystem. The proposed mechanism should provide the ideal bridge between the crying demand for housing and the willingness of the developers to meet that in the regulated environment through professional practices," Nimish Gupta FRICS, Managing Director, South Asia - RICS said. — TNS