Though millions of Indians feel steady and secure in their current situation, housing insecurity touches almost everyone at some point in their lives. Most Indians know that it is extremely difficult to find affordable and quality housing in our metro cities, and over half of all homebuyers admit that they have made at least one trade-off in order to cover their rent or home loan EMIs. Such trade-offs are pursuing a side hustle, cutting back on leisure activities, vacations and moving to remote suburbs.
As a nation however, there are far bigger costs that we are paying, unknowingly.
One, people living in houses that they struggle to afford often find themselves to be less happy, and the overall development of millions of children is compromised by living in far-flung homes, devoid of social and educational infrastructure. As a mother, this gives me sleepless nights. Two, many families shelling out a very large portion of their incomes for housing are faced with impossible and soul-sapping choices. Rent or quality education? Leisure or transportation?
As our country’s economic growth, spending power and ease of doing business scores improve, we need to walk the extra mile to fix another big issue; our global image when it comes to urban living conditions. Quality affordable housing, if ‘quality’ is determined by location and amenities, is still out of reach for most Indians.
The Housing for All by 2022, is that one electoral promise, which if followed through, could propel our nation to another level. A quick analysis clearly shows that in the last three to four years, affordable housing has been making regular headline appearances. But you must sample this. Though affordable housing has lately dominated the residential inventory supply, the shortfall in affordable homes will reach 30 million units by 2022, going by informed market estimates.
You don’t really need a market research to gauge that upcoming gap. Just look around your place of work in any metro city and what do you see? Though a major part of your city's population has some measure of financial flexibility, they would be unable to pay the high prices of even the simplest homes within the city. And these are not people below the poverty line we are referring to. These are people like you and me, hardworking and corner-cutting our ways through this maze of urban life.
What makes our cities the places to work in, but unaffordable to live in?
Our immediate reaction to that question is – affordable housing is the buzzword alright, but when compared to other countries, India lacks the policies that could promote and nurture affordable homes in big way. But that is far from the truth. The real spanner in the works is land. Precious city land which is prime for affordable housing today is in limbo; encroached upon by slums or lying completely unutilised by state and private corporations or, just about anything else.
Any business, real estate development included, attains viability through profits. Rising input costs and the astronomic cost of land in Indian cities, are making pure low-cost projects commercially unsustainable. The unit level economics for real estate developers goes kaput in the affordable housing model.
How then, can we give our hardest working citizens, the quality of life that they truly deserve? How can our cities act to address affordability if they want to avoid a mass exodus of key workers and other talented individuals?
Reforms are required at each stage of the housing value chain, from securing land, engaging local communities, to building and improving homes that are safe, secure and cost-wise sustainable by their inhabitants. A multi-stakeholder environment is needed to address calls for action from all entities involved – state and central governments, private developers and the society.
Communities develop only when the needs of all residents are met, but how do we ensure that? Effective strategies need to address both supply and demand side challenges.
No magic formula
Governments must define their long-term plans for increasing the supply of affordable housing, balancing the need to minimise urban sprawl with the limits of the viability of building denser and taller. Political considerations that could hold back the development of new affordable housing need to be addressed. Policies must ensure that affordable housing developments have adequate infrastructure and a strong regulatory environment must be created for the private and non-profit sectors.
Private-sector players need to keep abreast of emerging solutions in construction techniques and materials to drive down costs and work with governments to ensure an adequate flow of skilled labour. Banks, NBFCs and other financial institutions must work with developers to come up with new solutions in financing and innovative tenure models.
Other organisations such as community land trusts, housing cooperatives and microfinance institutions have a critical role in bridging the gap between governments and the private sector to improve the affordability of housing, as well as working with individuals to help them understand their options and make informed decisions; simply to maintain demand for affordable housing in the long term.
There’s really no magic formula to affordability. Reality is far more complex than it appears in analyses and committee recommendations. But having been in the thick of all things real estate, I know with certainty that builders and developers are tremendously innovative people and someday, despite all odds, they will figure out a way to get this done.
Kanika Gupta Shori is the founder and COO of Square Yards.