The Challenge of Tackling Unaffordability in Indian Metros

As all metro cities continue to expand in India, the cost of housing in their matured and well-developed areas also continues to go north. According to the Reserve Bank of India’s (RBI) definition, ticket sizes up to INR 65 lakhs in metros and up to INR 50 lakhs in non-metros are categorised as 'affordable housing'. It, therefore, comes as no surprise that a majority of new projects in Delhi-NCR, Mumbai and Bengaluru do not fall under this category. Mumbai’s real estate, especially, remains unaffordable to a majority of its residents. On the other hand, affordable housing projects are largely located in precincts that constitute the outer peripheries of these cities (see city maps below). The supply-side constraints like land availability and its cost make housing unaffordable within the primary city boundaries. Mumbai Bengaluru Delhi-NCR These maps illustrate the geographical spread of representative projects priced below INR 65 lakhs (marked in RED) and those priced above the RBI’s current definition of affordable housing (marked in green). They clearly show that these cities’ outer rims are the only affordable corridors while the main city and its immediate suburbs are priced higher. Most of the affordably-priced housing options are usually located much farther away from the respective city centres and are mostly in off-centric, economically-underserved locations where trunk infrastructure is also often unavailable. Notably, Bengaluru remains the most ‘affordable’ among these three metros with projects falling under the ‘affordable’ category currently available within the city limits. That shows how much the ground reality differs from theory. This gap between the existing definition and what’s available for home buyers in these metros is only widening. In such a scenario, the government should: • Work on easing the supply-side constraints by opening up new land parcels (for e.g. salt pan lands in Mumbai) to ease up the high land prices • Invest in development of newer and cost-effective construction techniques, • Take up reforms for re-densification of cities (for e.g., by scrapping old redevelopment laws) along with augmentation of existing infrastructure as well as public transport, • Focus on improving infrastructure in the peripheral areas and develop suitable connectivity to the cities’ business districts, if these precincts are to serve the purpose of providing a suitable living environment, • Institutionalise rental housing across cities, • Ensure that the local bodies actually implement local regulations and newer policies.