‘Affordable Housing’ echoes loudly today in the real estate sector in India. All developers are in the fray, developing ‘affordable housing projects’, one after the other.  The reasons are quite obvious.  Developers who were once only focused on the ‘luxury segment’ alone are now talking of ‘affordable housing’ – the reason being simple – the luxury segment has dried up.  Post sub-prime mortgage lending crisis in the US, plum jobs have evaporated, and so have fat salaries.  The effect of this is more than visible in the Indian job market as well. Fat salaries have become rare now.  Most of the developer projects catering to such ‘fat salaried’ people have got ‘stuck’.  The real estate developer has nothing else to do but to come down; to save his own business.  These were the same developers who were once saying that ‘affordable housing’ is the job of the Government and that it is a social responsibility !  The turnaround today is obvious.
    One of the issues that emerges is whether governments in the country have done enough or not as far as affordable housing is concerned.  Almost right from the day one, the Government of India has been talking of providing housing to the masses.  Many programmes have been initiated.  Institutional arrangements have been put in place to carry out the mandate. All these have actually been fashioned on the concept of ‘affordable housing’. Society has been divided into four income groups – economically weaker sections, low income groups, middle income groups and high income groups and all housing projects were to provide housing accordingly.  A public sector undertaking called the Housing and Urban Development Corporation ( HUDCO ) has been created way back in the year 1970 to promote ‘affordable housing’.  At least 50 percent of the housing which HUDCO funds has to be for the EWS and LIG categories. However, despite all this, the unmet housing demand is humungous; 24.7 million dwelling units.  All the central and state government programmes, the Housing Boards, Development authorities, Slum Improvement boards, cooperative societies, even the much touted Jawaharlal Nehru National Urban Renewal Mission ( JNNURM ) are but a drop in the ocean.  Their contribution to the housing supply in urban India is a far cry.  One may say that what was once called low cost housing, low income housing and social housing is now being called ‘affordable housing’; it is just old wine in new bottles. However, one must hasten to add that what has been given all these years is not really ‘affordable housing’, but housing which is subsidised to those who cannot afford !  The difference is subtle but serious.

Global Overview of Affordable Housing
    On the contrary, let us for a while look at the world around us.  Is affordable housing the problem only of our country ?  What are other countries doing about their housing problems ? Both the developed as well as the developing world has been facing problems of affordable housing.  The difference perhaps is in the magnitude of the problem.  International recognition of the urgent need for affordable housing has been pronounced many a time.  In the World Urban Forum 2008 held in China, providing affordable housing was seen not as a mere sectoral objective but as a route to achieving the Millennium Development Goals ( MDG ).  The UN Habitat and the UNCHS have been crying hoarse about the need to get housing top on the developmental agenda for decades now. 

Affordable Housing Initiatives in Developed Countries

Canada	The Canadian Mortgage Housing Centre has an Affordable Housing Centre, for consultations to help connect with resources and ideas to produce affordable housing projects, develop financial incentives and assistance, provide mortgage loan insurance, disseminate housing information, encourage renovation programs and organize consultations to help connect with the resources and ideas to produce affordable housing projects.
Australia	The Government adopted Affordable Housing in Sustainable Communities Strategic Action Plan in the year 2001. This plan articulates a vision for affordable housing and outlines a series of actions for realising the vision and has brought out Affordable Housing Design Guidelines.
USA	The Government established a National Affordable Housing Network in the year 1994.  This  provides assistance to NGOs ( Habitat for Humanity International ) with more than 1000 affiliated NGOs to provide housing in rural and urban America to provide low cost homes for the disadvantaged Americans.  The Annual Affordable Housing Summit held in May 2009 stressed the importance of reviving rental housing as a key policy area.  The three specific affordable housing programmes in the US are the HOME, SHOP and HOZ.
UK	The Government initiated the National Affordable Housing Programme ( NAHP ) where housing is provided for the disadvantaged sections of the society.

Efforts in India
    The Indian housing situation is quite different from that in other countries.  Some of the key elements of the housing system in India are a) a pyramidical income structure b) existence of the ‘great Indian middle class’ c) the culture of savings which is a positive sign d) a large base of formal sector workers who can easily access home loans e) an even larger base of informal sector workers who cannot easily access home loans ( and perhaps who cannot afford home loans ) and f) existence of poor who cannot even afford food and live on the bare minimum .  Add to this is the orthodox institutional structure, planning norms and lack of clear policy to encourage affordable housing.  However, taking cognizance of the need for affordable housing, the Government of India constituted a Task Force on Affordable Housing in January 2009.  This recommended that a) flats in the range of 300 sft-600 sft. for EWS/LIG categories with cost of the house not more than 4 times annual income and EMI not more than 30 percent of monthly income and b) flats more than 600 sft. but not more than 1200 sft. for other income groups with cost of the house not more than 5 times annual income and EMI not more than 40 percent of monthly income.  Further, under  JNNURM, the Government has facilitated sanction of as many as 1.5 million houses for the slum dwellers and urban poor spread across as many as 65 cities.  In several cities, urban development authorities and housing boards are initiating public-private partnerships so that affordable housing could be encouraged.

    However, for the urban middle class, particularly in the National Capital Region ( NCR ), the choice today is only the private real estate developers who have launched nearly a dozen projects where the affordable housing units have been priced in the range of Rs.15-20 lakhs.  This is also co-terminus with the interest subsidy given by the Government of India.  Real estate developers have resorted to a variety of ways of reducing the cost of the projects by reducing the flat areas, slightly reducing the specifications and cutting down on luxury features such as swimming pools, clubs, etc.  Some of the developers have also reduced their profit margins in order to ensure that the prices are right to attract buyers.  Add to it, they have also introduced festival discounts in the recent past in order to attract buyers.  All said and done, reasonable prices are prevailing now in the market which is quite favourable for the middle income segment.  Therefore, if buyers have been waiting for that opportunity, this is the time for them to start scouting and seal the deal.

    At another level, the issue today is that developers are giving all these attractive features and prices only because the market is ‘down’.  However, the question is when the buyers start increasing, are they going to increase the prices once again ?  In what way can this be checked ?  This is possible provided the concerned development authorities viz. NOIDA, Greater NOIDA, GDA, HUDA, etc. start prescribing conditions such as a limit on the maximum area of the flat which a developer could build so that the continuous supply of affordable housing could be maintained at the desired level. There is a huge unmet housing demand in the 400-800 sft. size category in the Rs. 15-20 lakh price range, where there is a great opportunity for real estate developers. Globally, it has been seen that strong government intervention has led to the emergence and sustenance of affordable housing programmes in various countries.  It is good that the Government of India has woken up to this.  However, unless and until stringent measures are prescribed to keep a check on permitted flat sizes, alongwith incentives for the developer to make reasonable profit, affordable housing may not be sustainable in the long run.