Why There Is A Need To Make Affordable More Affordable

India, as per Census 2011, has an estimated population of over 1,210 million. Of this, over 362 million are main workers while over 119 million are marginal workers (working for less than six months). On the other hand, the unemployed workforce in India in 2012 climbed to 44.79 million. Keeping all these figures in mind, how many people can afford a house when we talk affordable housing?

Now sample this.

Recently, an auction held to sell the flats meant for the economically weaker section (EWS) under Haryana Urban Development Authority (Huda) saw no takers till the last date of application. Around 1,500 flats in Gurgaon's Sector 47 and Rewari thus lie vacant. 'Eligible' in this context would qualify slum dwellers or those who have encroached upon government property and staying there for more than five years. These constitute people who have their Below Poverty Line (BPL) cards as well. In 2011, the World Bank estimated about 276 million people (in India) who are in the BPL category, their income being $1.25 per day. The Huda flats in the size range of 328-370 sq ft were priced anywhere between Rs 3.6-3.9 lakh and could be paid over 20 years.  Although vacant, in coming up with EWS housing, the developers and the government has taken a commendable step. 

Are we building in the right places?

The crux of the matter is that while we may be concentrating on building too many, the idea should be to build for the many in the right places. About 40 per cent of the population will move to the urban areas by 2025 says research and the effort has been to build more to shelter this population top-up. However, not every migrant workforce who is near Gurgaon or Rewari or for that matter wherever the EWS housing is looking for a unit on sale. More jobs for the skilled and the unskilled is the need of the hour that will balance the ratio of people who are in the rural and urban areas. But that is beyond the purview of this article. Building where it matters most may help ease the housing crunch that certain segments of society are facing today. 

The many layers of 'affordable'

Why EWS alone, even affordable housing for the gradually emerging middle class is no longer affordable. One needs to compromise on the budget or the location and worse, infrastructure and amenities to own an affordable home. Land is a limited resource and prime land is always coveted and gets saturated at the earliest. Therefore, the term affordable has outgrown its ambit altogether. Mumbai, where average per sq ft value is Rs 10,000, is no place for those looking at a unit that is remotely affordable. On an average, between 1983-2016, a highly skilled professional's monthly income was close to Rs 50,300, records the Ministry of Labour and Employment. The lowest recorded was Rs 43,000 per month. A low skilled worker was earning Rs 11,900 per month on an average. Experts say that if you are going in for a home loan, your EMI (equated monthly instalment) spend should not exceed 30 per cent of your take home. Therefore, the highly skilled ideally should not spend more than Rs 15,000 per month on EMIs as per aforementioned data. Even a shanty in Mumbai costs more and, therefore, broadly speaking, Mumbai is out of reach for even the highly skilled. 

However, we know that there exists a difference between highly skilled and the well placed. The Asia Pacific 2016 Wealth Report suggests that there are 2.36 lakh high net worth individuals (HNI) in India and they constitute the top of the pyramid. Mumbai houses the most number of HNIs in India. However, for those looking out at an EMI spend of anywhere between Rs 15,000-40,000 per month, most Indian cities have limited options. If you are looking at homes in the sub Rs 25-lakh category, only the peripheries open up for you, unless you are looking at a 1BHK unit in a small city. There is no denying the fact that while this asset class is expensive today, it has its benefits, too, and the 'affordable' has gone up a grade just to keep up with the inflation and the spend capacity of potential home buyers. 

However, those in the middle-to-upper-middle class would also like to own a home at affordable rates. While home loans makes things easy, we modify the term affordable to suit the needs of this segment. So, while this segment of buyers may be working in Delhi, they need to move to the neighbouring micro markets of Noida, Gurgaon, Faridabad, Bhiwadi, etc, whichever is closer to their workplace to have an affordable home. 

Over the years, many have forgone their interest for very spacious houses. In fact, over the last two years, new launches are smaller and this is not true of India alone but is a global phenomenon. In Britain, the average size of a housing unit in 2003 was 1,063 sq ft which stands at 956 sq ft today, about 43 sq ft less than the government's guidelines. The most crucial of determinants in this case is the pricing. When cost of living increases, prospective buyers 'resize' their requirements. In India, according to PropTiger Datalabs, 61 per cent of the new launches were in the affordable segment (units within Rs 50 lakh) and this could be attributed to sops offered by the government to the developers. 

Miscellaneous

Cost is not the only block. Affordable sometimes is not accessible because of a whole lot of problems. Prerequisites include proper documentation, awareness and opportunity. While the government strives to meet the housing deficit by 2022, there needs to be a closer look at the need and buy patterns. The term affordable is liked by all and takes a whiplash from all as well.