Inside India's Growing Affordable Housing Crisis

Once heralded as a vehicle for inclusive growth and national development, affordable housing now finds itself squeezed between vanishing supply, stagnant policy response, and rising urban aspirations

- Anuradha Mishra

In India's bustling metros, where ambition thrives and millions arrive with dreams of better lives, there is a crisis unfolding that is hard to miss-a dearth of houses these migrant employees (low- and mid-income) can afford to buy. The crux of the problem lies in the question: how much does an affordable house cost and how big or small is it? The government and different private developers have different definitions, and with the rising cost of real estate, what was once affordable may no longer be so for a large section of the population. The recent rate cuts by the Reserve Bank of India (RBI) may make a difference in terms of the equated monthly instalments (EMIS), but that will have no bearing on the original cost of a house.

In the past, a low-cost home on the city fringes or tucked into a newly developing area used to be the gateway for a modest-income family into urban homeownership. But today, that gateway is narrowing, and in some cities, it's closing entirely. Our research shows that the affordable housing segment, once the bedrock of India's urban housing policy and a launchpad for middle-class house ownership, is gradually making a quiet exit.

Developers are retreating from the segment, homebuyers are priced out, and the dream of owning a modest home, especially for low- and mid-income Indians, is fast becoming a casualty of the real estate market forces.

What Are Affordable Homes? The government has a defined benchmark for affordable homes. Under the Pradhan Mantri Awas Yojana (PMAY-Urban), the classification is based on income slabs and carpet area. It defines affordable homes as houses having a carpet area up to 60 square metres (sq.m) in metros and 90 sq.m in non-metros valued up to ₹45 lakh. Anarock Property Consultants defines affordable homes as those priced under ₹40 lakh.