Term Of The Day: Affordable Homes
Affordable Homes
The definition varies, but residential units that are affordable to individuals whose income is below the median household income are considered affordable homes. In 2012-13, the median income of households in India was Rs 98,867.
PropTiger Explains Affordable Homes
Governments across the world are committed to affordable residential projects. The Narendra Modi government is committed to providing homes for everybody by 2022. But, a universal definition of the concept is yet to emerge. According to the MHUPA, affordability of homes is calculated according to family income of the population. MHUPA criteria for defining affordable homes varies from one segment of the society to another, depending on their income level. KPMG defines affordable homes in terms of three parameters: Income level, size of the dwelling unit and affordability.
Many urban planning experts and economists find the concept of affordable homes problematic because willingness and ability to pay for residential units widely vary. But, there is growing acceptance to the guideline that if the cost of a dwelling unit is not greater than 30% of a household's gross income, it is affordable.
There is great demand for affordable homes in the country because India's GDP per capita is merely 1,498.87 US dollars. According to MHUPA, there is a deficit of 2.5 crore dwelling units for the economically weaker and low income groups (LIG) in India. The deficit of affordable homes in India grows at a rate of 3.6 lakh units per annum. But, a recent HDFC report observes that when compared to personal incomes, homes in India are more affordable than ever.
A popular belief is that there is great shortage of affordable homes in India while the unsold inventory in the premium home segment is unusually high. But, according to a recent PropTiger report, over 52% of the unsold inventory in the top nine markets for property in India was in the affordable home segment. But, nearly a quarter of the new property launches in these cities were priced over a crore.
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