Decline in interest rates unlikely to boost affordable housing

A cut in interest rates should be a big booster for affordable housing as the segment is highly rate-sensitive. But the reality may be different.

- RAGHAVENDRA KAMATH

CONVENTIONAL WISDOM SAYS a cut in interest rates should be a big booster for affordable housing as the segment is highly rate-sensitive. But the reality may be different.

That's because of poor connectivity and lack of social infrastructure in the areas where affordable housing projects can come up. Take Shankar Dube, 54, who works as a driver in Mumbai's Breach Candy area, who regrets that he sold his 200 sq ft hutment in Dadar and shifted to Dahanu near Mumbai in a one-bedroom apartment of 400 sq ft two years ago.

"We have to travel five kilometers to see a doctor and go to the next town to see a dentist," Dube said. If that is not enough, he has to travel two-and-a-half-to-three hours one way from Dahanu to Breach Candy. "I am thinking of quitting the job and going back to my native place as it is becoming very difficult," Dube said.

Amit Kumar Sinha, managing director and CEO at Mahindra Lifespace Developers, part of the Mahindra Group, said affordable housing demand has faced location and connectivity challenges. "To make the economics work, developers move to the outskirts of city limits. However, these locations are not well connected," Sinha said, adding that there is no social infra for families to live and primary breadwinner to commute to job-centres.