By Accommodation Times News Service
To meet its target of providing housing to all by 2022, the government along with the private sector needs to work to increase the supply of low-income houses, which would translate into business opportunity of Rs nine lakh crore for the developers, a recent report said.
“To realize the dreams of millions, the government, private sector and other stakeholders have to play their part to improve affordability of homes for the low-income customer,” advisory firm Deloitte said.
According to its survey, the low-income housing segment is estimated to be worth Rs 9lakh crore for developers and Rs seven lakh crore for housing finance companies. The report said the initial attempt of providing housing for the urban poor failed to keep up with the rapid urbanization, which led to low-income families living in cramped accommodations with limited civic amenities.
The government estimates a shortage of more than 18 million homes, of which 95 per cent are in the EWS and LIG segment (families earning up to Rs 16,000 per month). A study of 22 cities showed that at least 30,500 units below Rs 10lakh have been launched in 132 projects across those markets in the period between June 2011 to January 2013.
These cities, including Ahmedabad, Mumbai and Indore, have developed well with over 20 projects in each city providing housing below Rs 10lakh, it said. Further, around 30 per cent of the supply is priced below Rs 6lakh and developers are constructing smaller units such as one-room kitchen in these cities which are more affordable and they sell 25 per cent quicker compared to larger formats like 1 or 2 BHK apartments, the report said.
Access to housing finance for formal and informal low-income customers has also improved, the report said, adding that number of new players has entered this market and today over 10 companies are serving the low-income customer. These new companies have a combined loan portfolio of Rs 1,000 crore, and are growing at 100-300 per cent per annum and have near zero NPAs. The survey noted that many of the EWS and LIG families cannot afford privately built housing unless the government provides some subsidy. Presently, in most cities, a privately built apartment of carpet area of 269 sqft would cost about Rs 5.6lakh. A family at the top end of the economically weaker segment with access to Rs 60,000 for a down payment can only afford a home worth Rs 2.95lakh. Therefore a EWS family requires a subsidy of Rs 2.6lakh to buy the smallest stipulated privately built home.
“To improve the affordability of housing for the urban poor, both supply and demand side measures are required. On the supply side, cheaper land, innovative construction technologies, 100 per cent loan papers, small formats and smaller houses could help.
“On the demand side, targeted subsidies for the segments who cannot afford privately built housing, and making affordable housing finance available for all low-income customers are key,” the report said.