CREDAI Pinpoints Increased Land Affordability and Removal of 45 Lac Cap as Resolutions to Boost Affordable Housing Demand

With the Government’s vision of ‘Housing for All’ and its consistent measures towards maintaining the growth of the Affordable Housing category, CREDAI today recommended and pinpointed 2 key aspects that it believes would help boosting both - the supply and demand - of affordable housing in India. According to CREDAI - who are currently hosting its 22nd NATCON in Sydney, Australia - Land Affordability and the current cap of Affordable housing, which stands at 45 lacs, need to be addressed to ensure sustained growth of the Affordable Housing segment.

In a press interaction hosted in Sydney, CREDAI claimed that cost of land - which accounts for nearly 50% of the total cost of any project, is a huge financial hurdle while building affordable housing projects. This is particularly a major problem faced by Developers of Tier 1 cities, wherein the cost of land is much higher than other developing regions of the country, which has a huge impact on the overall affordable housing supply in India. CREDAI believes affordable land costs for affordable housing projects would help and enable developers to build more houses under the segment.

CREDAI also put forth its recommendation on the definition of affordable housing - which stands at Rs 45 lacs. The cap, set at Rs 45 lacs, has become impractical due to significant inflation in real estate prices over the past seven years. Data from the National Housing Bank reveals a 24% increase in housing rates in India since June 2018 alone, underscoring the need for revision. The real estate industry advocates for a re-evaluation that reflects current market realities, ensuring adequate availability of affordable housing units to meet current and future demands. CREDAI believes the definition should be based on the size of the house Square Ft. or Square Meters, and not by the price.

Boman Irani, President, CREDAI “Affordable Housing has been one of the most important segments of Indian Real Estate in the past few years, which has fulfilled the dreams of millions of Indians to become homeowners. Currently, there is a need to alter some fundamental aspects to get the segment back on a robust growth trajectory that can lead to sustained and sustainable growth. We strongly believe that removing the 45 lacs cap under its current definition, and defining it solely by size, would provide a huge boost to both supply and demand of housing projects under the segment.”