By 2030, India’s affordable housing market is poised to grow exponentially, reaching an estimated value of ₹67 trillion. This sector will address the demand for 22.2 million new housing units in urban areas, with 95.2% or 21.1 million units focused on affordable housing. Factoring in the existing deficit of 10.1 million units, the cumulative demand for affordable housing is projected to reach 31.2 million units, according to Knight Frank.
The financing opportunities in this sector are significant, with an estimated ₹44.6 trillion required to support the deployment of these units. Housing finance companies and commercial banks currently hold a combined portfolio of ₹13 trillion in affordable housing loans. The segment has witnessed capital inflows of $1.6 billion between 2011 and September 2024, which is a mere 3.6% of the total real estate sector inflows.
Despite its growth potential, challenges persist. The average cost of affordable housing units has surged post-pandemic, significantly impacting affordability for economically weaker sections (EWS). For instance, in Mumbai, the launch price of an affordable unit has risen from ₹48 lakh in 2019 to ₹73 lakh in 2024. Similarly, in the Mumbai Metropolitan Region (MMR), units under 30 sqm have seen a 55% price hike, compared to a 29% increase for larger units between 2019 and 2024.
The EMI-to-income ratio for EWS households has increased sharply, from 43% in 2020 to 62% in 2024, driven by higher interest rates and escalating prices. Meanwhile, for middle-income group (MIG) households earning ₹12 lakh annually, the ratio rose from 28% to 41% during the same period. These trends highlight the dual challenge of meeting demand while maintaining affordability in India’s affordable housing sector.
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