The affordable housing segment in India is grappling with a myriad of challenges, despite the growing demand for affordable homes. A recent survey conducted by Anarock-FICCI revealed that nearly 53% of homebuyers are dissatisfied with the available options, citing project location, low construction quality, inferior design elements, and small unit sizes as the primary deterrents.
The survey also highlighted concerns about location accessibility, with respondents expressing concerns about proximity to healthcare services, workplaces, recreational facilities, and security. These factors play a crucial role in determining the overall desirability of affordable housing projects. Despite the rising demand, the supply of affordable housing has been on the decline in recent years. According to Anarock, the share of affordable housing launches in major cities has dropped from 40% in 2019 to 17% in the first nine months of 2024. This decline can be attributed to a combination of factors, including rising prices, higher home loan rates, and the lingering effects of the pandemic.
A report by Knight Frank India further underscored the challenges faced by the affordable housing segment. While homes priced above ₹1 crore accounted for 46% of total sales in Q3 2024, units priced under ₹50 lakh only constituted 24% of the market share. This indicates a shift towards higher-priced segments and a decline in the affordability of housing options. To address these challenges and boost the supply of affordable housing, the Union Finance Minister Nirmala Sitharaman announced a significant outlay of ₹10 lakh crore under the PM Awas Yojana Urban 2.0 in the Union Budget 2024-25. Additionally, the government has revived the Credit Linked Subsidy Scheme (CLSS), allocating ₹4,000 crore to provide interest subsidies to prospective homebuyers.
These initiatives are expected to increase the affordability of homes and stimulate the supply of affordable housing, particularly in peripheral locations of Tier 1 and Tier 2 cities that are connected by new infrastructure corridors. However, the challenges facing the affordable housing market are complex and multifaceted. Despite the government’s efforts, it remains to be seen whether these initiatives will be sufficient to address the growing demand and improve the quality of affordable housing options available to Indian homebuyers.
