The landscape of affordable housing in India has witnessed a significant downturn in recent years, prompting calls from leading real estate stakeholders for urgent government intervention. According to data from Anarock Property, the share of affordable housing in total property sales has plummeted from 39% in 2020 to a mere 19% by 2023, underscoring a critical need for policy support to rejuvenate this crucial segment of the market.
Industry experts argue that the declining interest in affordable housing can be attributed to several factors, primarily the escalating costs of land acquisition and construction materials. The rising land prices in both metro and non-metro cities have compounded the challenges for developers, making it financially unviable to embark on new projects in this segment. Furthermore, the withdrawal of Section 80-IBA (5), which previously allowed developers a 100% deduction on profits from affordable housing projects, has further dampened enthusiasm within the sector.
Developers are emphatic about the necessity for government-backed incentives to stimulate growth in affordable housing. They highlight the need for subsidies on borrowing costs and reductions in land acquisition expenses to make projects financially viable. The earlier-introduced credit-linked subsidy scheme, capped at Rs 45 lakh per buyer, has been cited as a restrictive factor hindering broader adoption and growth in the affordable housing sector.
One prominent real estate developer expressed readiness to launch new affordable housing initiatives contingent upon the introduction of favourable government policies. They stressed that incentives such as tax benefits and reduced interest rates are indispensable for catalyzing renewed interest and investment in this critical segment of the real estate market.
Looking ahead, industry stakeholders are urging the government to reevaluate and introduce fresh initiatives aimed at revitalizing affordable housing. These measures are seen not only as essential for addressing housing shortages but also for bolstering economic growth by encouraging construction activity and enhancing employment opportunities in allied sectors.
