Affordable Housing In India Is Based On These Three Parameters

At the beginning of the 12th five-year plan (2012-17), urban housing shortage was estimated at 19 million units. But, with the Narendra Modi-led government's initiative of providing housing for all by 2022, it is expected that nearly 600 million people will have a roof on their heads. While this ambitious plan is already being accelerated, it is likely to have a negative impact of on the already strained urban infrastructure.

It has been projected that nearly 90 per cent of the present housing shortage in India is faced by the economically weaker sections (EWS) and low- income group (LIG) sections. A considerable portion of the upper end of LIG group, to lower and middle end of middle-income group (MIG) group, which we can describe as the emerging Indian middle class, is yet to witness adequate living environment, too. If this issue is not addressed soon, it can lead to unplanned and unsustainable urbanisation.

In such a scenario, it becomes essential to understand the actual meaning of affordable housing and also, examine the challenges ahead. While every nation has a different definition of affordable housing based on the financial potential of their citizens while buying a home, in India, where market dynamics vary from individual to individual, affordable housing can be broadly defined as a function of three parameters. These are:

The monthly household income of the prospective buyer

Many a times, the two terms 'affordable' and 'low-cost' are interchangeably used. Whereas, both are in fact very different when it comes to their actual definitions. While affordable houses are built with reduced cost keeping intact high quality standards, in low cost homes that standards are not high, too. According to the household income of a family as per the number of earning members, a prospective buyer can review the expenses and then visualise of owning a house. Affordable housing segment sees this as the first parameter that is focused on. Hence, homes that can fit the budget of the emerging middle class and at the same time lower income groups is what affordable housing aims to achieve.

The size of the dwelling unit

Both these parameters are independent from each other. Reducing the cost in affordable housing doesn't allow to deteriorate the quality of construction. While preserving the contemporary standards of the building, the flat size may fluctuate. The availability of land is the biggest issue, so while constructing affordable houses, the dwellers may need to compromise with the size of the unit.  

The affordability of the home buyer

This parameter is interrelated to income and property price and hence, can be termed dependent. This housing segment is for those people who desire to own a house but have a limited income, deprived of getting home loan and witness a lack in the number of houses that will fit their confined budget. The ratio of the price of the home to annual income or the ratio of equated monthly instalment (EMI) to monthly household income should allow the homebuyer to own a house.

Apart from these three parameters, realty players should keep in mind that a well-constructed home in a planned locality with proper sanitation, security, continuous electricity and water supply holds substantial value for a consumer, whose present living conditions are below average. Lastly, the end user for affordable housing pursues better connectivity (roads, highways, flyovers – bus, metro, train) to places of work in central urban centres.