‘Affordable housing’ not so affordable for India’s urban middle class

Rajeev Bhalla, an IT professional, was very happy when his bankers informed him that he would get a rebate of up to Rs 2 lakh on the purchase of an affordable house.

Published: 16th July 2019 07:42 AM  |   Last Updated: 16th July 2019 07:42 AM   |  A+A-


For representational purposes ( File Photo | EPS)

Express News Service

Rajeev Bhalla, an IT professional, was very happy when his bankers informed him that he would get a rebate of up to Rs 2 lakh on the purchase of an affordable house. However, when he went to scout for possible locations and apartments he could purchase, all he could find in the Delhi-NCR area were either studio apartments or one BHK (one bedroom-hall-kitchen) flats, much to his disappointment.

“There was no home available in the affordable price bracket. All I was getting was studio apartments or one BHK units. While the scheme is good, the definition of affordable housing is hardly applicable for houses in metro cities,” Bhalla pointed out.

While the government is pushing hard to promote affordable housing, the ground reality is that homes remain unaffordable for a large section of the urban middle class in large metro cities like Delhi, Mumbai, Chennai and Bengaluru. Data released by the Reserve Bank of India (RBI) last week painted a grim picture, showing that affordability has worsened over the past four years, with Mumbai remaining the least affordable city when it comes to owning a house.

RBI’s asset price monitoring survey showed that the house price to income (HPTI) ratio an index of affordability rose from 56.1 in March 2015 to 61.5 in March 2019 across the country. Developers claim that despite a heavy push and incentives from the government, high land prices coupled with high input and labour costs are the main reason why houses remain largely unaffordable in big cities. They went on to say that the definition of affordable housing must be revised for big cities.

“The price of affordable housing should be decided on the basis of the income of middle-class families. The average income of families in these cities is readily available and thus pricing should be decided accordingly,” said Rajat Goel, joint managing director, MRG World.

Ashok Gupta, CMD, Ajnara India Ltd., is also of the view that the EMI should not exceed 25 per cent of the homebuyer’s salary. “To ensure affordable homes come at this price, thorough research is needed where every aspect of the people of the city has to be taken into account. These include average spending on office commutes, household expenses, medical exigency expenses etc.,” he said. 

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