By laksh5382 
from india affordable housing This segment is expected to reach ₹67 trillion by 2030 and demand is expected to be around 31.2 million units. However, a mismatch exists in the definition of affordable housing when one compares how policy-makers and developers view it, says Ghulam Zia, Senior Executive Director – Research Advisory, Infrastructure & Valuation, Knight Frank India and Lead, CII Task Group. Said on affordable. Accommodation.
For example, between 2019 and 2024, average launch prices in the Mumbai Metropolitan Region (MMR) grew at a CAGR of 8 per cent for residential units below 30 sq.m (EWS category), while residential units between 60 and 160 sq.m. grew at the rate of 4.4 percent for. (MIG).
The average price of a house below 30 sq m in Mumbai is ₹26 lakh and a home loan requires ₹25 lakh. It will be challenging for an EWS family with an annual income of less than ₹3 lakh to get this loan as the EMI requirement is above the FOIR (fixed obligation to income ratio) limit set by banks.
Therefore, there is a need for a policy revision to suit the residential markets, he points out.
Zia does not rule out “bubbles” in this real estate There has been significant price increase in the mid, premium and luxury categories in the region.
in an interview on business Line, On the sidelines of the CII conference on the Indian housing landscape, he talks about the affordable housing segment, the growing push into the premium segment by developers and the impending real estate bubble at the upper end of the spectrum.
Edited excerpts:
Redefining the scope of affordable housing has been frequently discussed; And Knight Frank India also pointed out the “mismatch” in a recently released report. Your comments.
The RBI, in defining affordable housing under its Priority Sector Lending, prescribes loan eligibility based on house value, distinguishing between metro and non-metro cities. But, there exists a discrepancy in the definition of affordable housing by policy makers and the existing housing market. The average unit cost in the affordable housing category has increased significantly compared to the pre-pandemic period of 2019. There are state-wise variations and city-wise variations as well. In fact, there are variations by area within cities. This has impacted the affordability of home buyers, especially in the EWS category.
Is there a pricing formula that can be worked out?
In 2019, ₹45 lakh was given as affordable housing for metros and ₹35 lakh for non-metros by policy-makers. What we are saying now is that if you consider the CPI and overlap it with the 2019 numbers (₹45 lakh), it comes to at least ₹57 lakh or so in metros . We will have to think about this much. Ideally, it should be around ₹60 lakh.
So are developers losing money if they choose affordable housing?
It is not that developers are losing money or incurring losses. Nor are they building a house worth ₹65 lakh and selling it for ₹45 lakh. But look at it this way, I build a particular number of houses, each priced at ₹50 lakh. The question is then who is my target buyer? Anyone with a household income up to Rs 45 lakh cannot buy it. A developer has to be careful about how he positions his offering so that it fits into a particular category. The issue here is that developers are not creating that supply in affordable housing in the first place. It is not the other way around, i.e. they are building houses but are not finding buyers.
If there is demand for affordable housing, why are developers not supplying?
Developers see that a certain category of projects is selling more than other segments (premium over affordable), and there is no feasibility or profits coming from those sales, then why do they spend energy in building houses for the lower strata of the society. do.
Also for the developer, a way to make easy money by selling those houses – because it suits his logistics or infra set-up – where people are already lining up to buy it. The developer has already sold them. Now compare this with the scenario where new homes are built, but the developer has to wait for someone to come and buy, sales are not assured and then put heavy emphasis on marketing to move that stock. In comparison, the first is an easier solution for the developer.
The price growth in residential real estate is unprecedented. And it is out of reach of many people. Are we seeing a bubble?
The price rise at the lower end of the market is not as high as that at the upper end (₹80 lakh and above). In affordable housing, we have not seen price increases.
Here – at the upper end – the rise in prices is evident, as people are paying any price to buy a home. People are standing in queues and this is putting a lot of pressure on prices. But this is limited to a particular class only.
So obviously, concerns or comments (of a bubble) are valid when it is luxury or the upper end of the market. I think in some situations, it has already broken the top. Of course, a bubble is forming; And developers are admitting it privately too. Sales may be slow at select locations.
The slowdown in urban consumption is now a reality. Will this impact affordable housing?
Affordable housing was always affected. Immediately after Covid, their spending propensity in this sector was adversely affected. After a year or so (post-Covid), people were hit by the interest rate hike-cycle. Hence home loans saw an increase of 200 – 250 bps. From 6.5 percent it is currently around 9 percent. And that has put homes at the lower end of the market out of reach. Fluctuations in home loan interest rates are a matter of concern.