Over 40% of the Indian population is expected to live in urban areas as against current figure of 34% and this is likely to create a demand for 25 million additional affordable units, estimated a RICSKnight Frank report.

The current housing shortage in urban areas is around 10 million units and most of the housing shortage lies in the Economically Weaker Section (EWS) and Lower Income Group Segment (LIG).

According to the report, as of July 2019, 8.36 million houses have been sanctioned under the government’s “Housing for All by 2022” initiative. Construction for 4.9 million units has begun and 2.6 million units of which have been completed. Given the past trend, additional 1.64 million houses are likely to be sanctioned by December 2019, making it highly possible to achieve the 10 million houses target by 2022.

However, the report, noted that a subsidy-based approach may not be enough for maintaining sustained growth in the affordable housing segment and to address the huge demand.

“Affordable housing is a high potential segment that the private development companies are yet to explore to its potential. Unlike other segments of housing, affordable housing poses an interesting challenge involving strategies at all levels,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

He believes that given the requisite volume, the category may need to look at innovative solutions right across the stages of development including statutory clearance, design, building and construction management along with marketing and sale.

Financing for affordable housing can be broadly classified into- debt, equity and subsidy. From Fresh disbursals of HFCs and Scheduled Commercial Banks (SCBs), it is evident that

The share of EWS sector in new loan disbursals has come down each financial year from 21% in 2012-13 to just 10% in 2017-18. Moreover, even the share of LIG sector in fresh disbursals has also declined from 39% in 2012-13 to 33% in 2017-18.

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