MHADA cuts home prices to boost demand for affordable flats

MHADA has reduced the prices of select affordable housing units in Mumbai’s outskirts after witnessing a sharp fall in applications despite soaring demand citywide. The price slash comes amid persistent challenges faced by low-income buyers in securing home loans under PMAY norms, particularly for projects in Khoni and Shirdhon.

For years, the Maharashtra Housing and Area Development Authority (MHADA) has enjoyed a reputation for overbooked lotteries, with demand for affordable housing often outstripping supply many times over. In 2023, over one lakh people applied for just 4,000 housing units. A similar trend followed in August 2024, with 30,000 applications for 2,000 homes. However, this momentum unexpectedly halted when the Authority received just 10,000 applications for over 14,000 units announced in October 2024—marking the first sign of stagnation in its urban housing strategy. Of particular concern are two large-scale housing developments in Khoni (Kalyan) and Shirdhon (Thane), where MHADA made over 12,000 homes available under the Pradhan Mantri Awas Yojana (PMAY). Despite modern construction and an extended deadline for applications until December 24, 2024, uptake remained dismal. As of June 21, 2025, only 4,200 of those units had been sold.

Officials attributed the poor response to a confluence of factors. According to the Konkan Board, many potential applicants under PMAY are informal-sector workers, daily wage earners, or those recently employed—segments that struggle to meet the stringent documentation and income norms set by lenders and the housing scheme itself. While PMAY aims to democratise homeownership, its execution often falters when financial eligibility criteria remain out of sync with urban realities. Banking professionals also confirmed these systemic hurdles. A senior home loan official from a nationalised bank explained that applicants with family incomes below ₹6 lakh per annum are considered high-risk borrowers. With limited or no collateral, they are often denied loan approvals, even under government-subsidised schemes. As a result, the affordability crisis is not one of pricing alone—but of accessibility.

Recognising this, MHADA has announced a strategic reduction in housing prices at its underperforming sites. At Shirdhon, the price of units has been slashed by ₹1,43,404, bringing them down to ₹19.28 lakh. In Khoni, the cut is ₹1,01,800, with final prices now at ₹19.11 lakh. Authorities are hopeful that this price correction will renew buyer interest and improve the absorption rate of the available stock. Apart from pricing, efforts are also underway to enhance infrastructure around these housing clusters. Previously, one of the key deterrents was the lack of reliable electricity and water supply—issues now addressed via connections facilitated through the Maharashtra State Road Development Corporation (MSRDC) and the Maharashtra Industrial Development Corporation (MIDC). According to civic officials, basic amenities have significantly improved since the projects were first announced.

In addition to essential services, the Authority has committed to creating a more integrated living environment. Plans are in motion to develop amenities such as multi-purpose halls, gyms, convenience stores, schools, and healthcare facilities within or adjacent to the housing complexes. These efforts, MHADA believes, will elevate the livability of the area and make it more attractive to potential homebuyers who are still weighing their options. Public outreach is also being intensified. From street plays and mobile kiosks to targeted campaigns in transport hubs and market areas, the Authority is deploying multiple channels to boost awareness and build trust. In a housing market often marred by builder delays and opaque dealings, MHADA’s lottery system remains one of the few government-led housing models considered transparent and relatively dependable.

Still, challenges remain. While price corrections may address a part of the affordability equation, structural reforms are needed in how financial institutions assess risk among economically weaker sections. Many urban planners argue that the PMAY framework must be decentralised and tailored to urban ground realities, especially in metro regions like Mumbai, where informal employment is the norm. There’s also an argument for recalibrating MHADA’s project locations. While land availability pushes developments to the urban periphery, demand remains strongest in areas with transit connectivity and established job markets. Without holistic regional planning, affordable housing risks becoming spatially disconnected from the livelihoods it is supposed to serve.

Nonetheless, MHADA remains optimistic. Officials insist that the recent drop in applications is temporary and linked to isolated variables—primarily the PMAY eligibility gap and peripheral location concerns. They believe that recent price cuts, combined with upgraded facilities and ongoing outreach, will reverse the trend in the coming months. While the Authority currently has no plans to make the unsold units available to higher income groups, it may reconsider depending on how the next application cycle unfolds. For now, its strategy rests on faith in market correction and the resilience of Mumbai’s demand for affordable housing—a demand that continues to remain unmet in central urban areas.

As Indian cities grapple with rapid population growth, land scarcity, and the twin goals of climate resilience and social inclusion, public housing institutions like MHADA must evolve. The stakes are not just in the number of units sold—but in creating equitable, connected, and sustainable communities. Whether Khoni and Shirdhon can become such models may well determine how India approaches urban housing in its next growth phase.

MHADA cuts home prices to boost demand for affordable flats