Affordable Housing by Manpreet Singh Chadha, Promoter Wave Group


By Manpreet Singh Chadha, Promoter Wave Group

Affordable Housing – Need of the Hour!

“Owning a home is a keystone of wealth… both financial affluence and emotional security”.


Buying a home is one of the biggest decision we make in our lifetime and that is why owning a home is not just the status, but an emotional fulfilment for everyone. Real estate is the most preferred asset in our country and outlook of the industry looks promising in coming quarters of 2019.

Last few years saw factors like piling unsold inventory, policy changes such as demonetisation, RERA & GST implementation, etc. coupled with litigations adversely affecting the sector. But, even though the sector had a tough time, one segment of it, that has been giving it a push and driving demand is Affordable Housing. Catering to the needs of lower and middle income group of population in India, The Government of India took a number of steps to make affordable house available to everyone. After giving the infrastructure status to affordable housing sector, the government brought the country closer to realising the Housing for All mission by 2022.

Since receiving its ‘infrastructure status’ in 2017, affordable housing has been beneficial for both developers and buyers alike. It has given real-estate developers a huge benefit of lower borrowing rates, tax concessions and increased flow of foreign and private capital into their projects. With better incentives, and lower cost of capital, more buyers have been motivated to invest. This segment has given boost to both demand and supply and has given a much-needed impetus to the sector.

Affordable housing has been characterised in various parameters, from project locations to its unit sizes.  These are only parameters, and they do not limit the segment. The criteria for affordable housing have been broadened, from brick and mortar, affordable housing has now moved to well-designed modern apartments with contemporary amenities. These homes hold an aspirational value for a buyer.

The two major factors that are driving the demand for affordable housing is rapid urbanisation and changing culture of home ownership.

With rapid urbanisation, more and more people are moving from rural areas to urban setting in search of a better living. This in turn has increased the demand for affordable housing.  As per a study by IBEF, affordable housing has potential market in the urban India, as the market size is forecasted to grow about 1.5 times from 25 million households in 2010 to 38 million household in 2030. Seeing its growing potential, real estate developers are eyeing this segment in the hope of better returns.

Buying a home is an aspiration for everyone. Progressive urbanisation has led to a growing culture of home ownership. Today, people not only from urban class but also people from lower income group aim to own a house.

Affordable Housing and Economy

Working towards achieving the “Housing for All” mission, central and state governments and private sector builders, all have to work cohesively and ensure that affordable housing is available to everyone.

According to a research by CLSA India Pvt. Ltd., it is estimated that 60 million new homes will be built between 2018 and 2024, which would create around 2 million jobs annually and give a fillip to India’s gross domestic product (GDP) by 75 basis points. Affordable housing segment has been growing steadily and it is projected to rise almost 70% to 10.5 million annually by year 2024. Affordable housing segment is one of the indicators of balanced growth in the country. 

A large number of our country’s population is in the lower middle class or economically weaker section, andthey are driving demand in affordable housing. To cater to these sections of the society, government introduced a number of SOPs that increased the demand in the affordable housing. To further incentivise affordable housing, the Budget 2019, proposed an additional Rs. 1.5 Lac deduction on interest paid for affordable housing loans till March 2020, which leads to a benefit of Rs. 2.5 Lac over the tax period of the loan for the loan payer. Not only this, but the interest subsidy was also revised to Rs. 3.5 Lac for homes under Rs. 45 Lac. This proposal could help the buyers lower their tax burden by 3-10% every year.

An increasing number of developers are exploring the affordable housing segment, encouraged by the government initiatives and rising demand. The Budget 2019 also increased the sizes of an affordable units, which further incentivised affordable housing for developers who were earlier deterred by the small size of homes. Furthermore, affordable housing segment is the only segment that gives a developer 100% tax exemption.

Many private developers are working towards creating affordable living spaces with best of amenities, to cater to the rising housing demand in this category. Affordable housing has a high rate of absorption, which makes it a profitable business. There is an immense potential for this category in tier 2 cities and periphery of metros, as land is easily available and the investor community is enthusiastic about investing here.

Our project, Wave City, is being developed keeping affordable housing as our primary focus. We are developing a city that gives our buyers a safe living environment and is surrounded with greenery. With every conceivable amenity at hand, our project is set on the investment highway, NH 9 (previously NH 24), Ghaziabad. Developed on a hi-tech city concept, Wave City is a self-sustainable integrated township, developed with the objective of maximum liveability potential. 

Affordable Housing – The Future

At the end of the day, for a property buyer, capital appreciation is the most important thing, and as per industry experts, affordable housing has better scope of appreciation. Investors see huge potential in this market and they eye on getting better returns.

Today, the real estate market is ruled by the millennial. The way this generation thinks and research is completely different from the previous one. What attracts this section of buyers is quality homes at a sensible price, with amenities catering to their requirements. This generation is fulfilling their aspiration of owning a home sooner than expected. Compact and quality living is one of the recent trends that is widely accepted by these homebuyers. Here is where, affordable residential units is catering to demands of this particular segment.

The Budget 2019 has given lots of hope for this segment of housing. The demand for modern and affordable dwelling units is on a rise and is expected to affect the overall residential real estate market. With current government reforms and active participation by private players, both working towards “Housing for All”, will boost real estate sector on a large scale.

Corporate Comm India (CCI Newswire)