Affordable housing market is likely to hit the Rs 6.25 lakh crore mark by 2022 for a number of reasons such as increasing population, young demographic profile, shift towards nuclear families and rapid urbanisation, says a report by Investment Information and Credit Rating Agency of India (ICRA) Limited.
With the huge differences in household incomes and high home prices, the popularity and demand of affordable housing will increase as the market is driven by end-users. Also, low cost and affordable housing segments are often undertaken by either government or unorganised and smaller developers that results a shortage of housing.
The government has come up with many incentive plans which prompt homebuyers to go for affordable housing. Some of the incentives are credit-linked subsidy for housing loans for the economically weaker section (EWS) and the low-income group (LIG) under the Pradhan Mantri Awas Yojna (PMAY) and the additional income tax deduction for interest on home loans of up to Rs 35 lakh. Along with these, the Centre has recently proposed interest subvention of 3% and 4% on home loans of up to Rs 9 lakh and Rs 12 lakh under PMAY.
“The housing shortage is expected to increase from the current level of 19 million units to 25 million by 2021, based on a stable decadal growth rate. Assuming an average ticket size of Rs 25 lakh per unit, this translates into a market potential of Rs 6.25 trillion (lakh crore) for affordable housing projects,” says K Ravichandran, Group Head, Corporate Ratings, ICRA.