Additional 25 million affordable units will be required by 2030
RICS (Royal Institution of Chartered Surveyors) in association with international property consultant Knight Frank today released a report Brick By Brick- Moving towards ‘Housing for All’. The RICS – Knight Frank report estimates that the current housing shortage in urban areas is around 10 million
Published -
Jul 31, 2019 6:30 AM
RICS (Royal Institution of Chartered Surveyors) in association with international property consultant Knight Frank today released a report Brick By Brick- Moving towards ‘Housing for All’. The RICS – Knight Frank report estimates that the current housing shortage in urban areas is around 10 million units. Most of the housing shortage lies in the Economically Weaker Section (EWS) and Lower Income Group Segment (LIG). It quotes that as of July 2019, 8.36 million houses have been sanctioned under the “Housing for All by 2022” initiative. Construction for 4.9 million units has begun and 2.6 million units of which have been completed. Given the past trend, additional 1.64 million houses are likely to be sanctioned by December 2019, making it highly possible to achieve the 10 million houses target by 2022. Projected subsidy disbursement over next 3 years for the same is projected to INR 1 trillion. The latest RICS – Knight Frank report estimates that by the year 2030 more than 40% of the Indian population will live in urban India as against current figure of 34% which is likely to create a demand for 25 million additional affordable units. However, to address the huge demand, a subsidy-based approach may not be enough for maintaining sustained growth in the affordable housing segment. India’s urban housing shortage is being primarily driven by the EWS and LIG categories. An analysis of the demand supply shows, that on an average, nearly 0.6 million homes are required every year in the top eight cities versus a supply of 0.2 million 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 2.5 million. Whereas, the demand in the EWS and LIG category is around 0.34 million. Shortcomings leading to shortage of affordable housing are unavailability of urban land for affordable housing and lengthy statutory clearance and approval processes. Financing for affordable housing can be broadly classified into- debt, equity and subsidy. 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% in FY 2013 to just 10% in FY 2018. Moreover, even the share of LIG sector in fresh disbursals has also declined from 39% in FY 2013 to 33% in FY 2018. RENTAL HOUSING MARKET- Missing piece of the puzzle The report also touches up Rental Housing Market and as per Census 2011, over 21 million (27.5%) urban households live in rented accommodations. The rental housing market is therefore projected to grow at a faster rate than rate of urbanisation over the next 20 years. The population living in rental housing has no willingness to own and landowners find rental housing unattractive due to Low residential yields, high risk of property litigation and cost of transaction, which leads to a high number of vacant houses in large urban centres.
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