India’s Affordable Housing Mkt To Hit Rs 67L Cr By 2030

Almost 95.2 per cent of 22.2 million units of housing demand will be concentrated in the affordable housing segment led by factors such as urbanisation and employment opportunities

Hyderabad: India’s affordable housing market is projected to reach Rs 67 lakh crore by 2030, with cumulative demand likely to be 31.2 million units, a report mentioned.

According to the report, ‘Affordable Housing in India: Demand-Supply Assessment and Financing Opportunity,’ released by Knight Frank India and CII (Confederation of Indian Industry), the existing shortage as well as upcoming demand for the affordable housing segment in India is estimated to be 30.7 million units by 2030, and the opportunity to finance these units is calculated to be Rs 44 lakh crore.

Led by factors such as urbanisation and employment opportunities, 22.2 million units of housing will be required in urban centres in the country. Almost 95.2 per cent of this demand, equivalent to 21.1 million units, will be concentrated in the affordable housing segment.

“As urbanisation accelerates and income levels rise, affordable housing is positioned to play a pivotal role in shaping the country’s real estate landscape,” Knight Frank India Chairman and Managing Director, Shishir Baijal, said.

Addressing this demand will require innovative strategies, including public-private partnerships, policy interventions, and advancements in construction technologies, making affordable housing not just a social imperative but also a critical driver of economic growth, he added.

A predominant share of 45.8 per cent of the demand will be concentrated among the economically weaker section (EWS) households as there is already an existing shortage of 10.1 million units.

The current portfolio of the affordable housing loan market in India is estimated to be Rs 13 lakh crore, with Housing Finance Companies (HFCs) constituting Rs6.9 lakh crore and Scheduled Commercial Banks (SCBs) holding a share of Rs 6.2 lakh crore.

The loan market in this category is anticipated to experience significant expansion due to the escalating potential demand for affordable housing. The reliance on loans is notably high in the affordable housing segment as compared to premium in India.

Based on an assumption of a 77 per cent loan dependency and loan-to-value (LTV) ratios applied at various loan thresholds, the potential financing opportunity for banks and Housing Finance Companies (HFCs) in the affordable housing segment is estimated to be Rs45 lakh crore, according to the report.

Between 2011 and September 2024, the affordable housing segment attracted capital inflows of $1.6 billion. This represents 9.8 per cent of the total capital directed towards the residential sector and a mere 3.6 per cent of the overall real estate sector inflows. The limited inflow of foreign funds has been a key factor, with foreign investments accounting for only 15 per cent of the total private equity inflows into affordable housing.

In the existing demand side challenge, there is a mismatch in categorisation of affordable housing. The Ministry of Housing and Urban Poverty Alleviation (MoHUA) refers to affordable housing as residential units that are reasonably priced for individuals with incomes below the average household income. MoHUA targets economically weaker sections (EWS), low-income groups (LIG) and middle-income groups (MIG).

However, a disconnect persists between policymakers' definition of affordable housing and the realities of the current residential market. In Mumbai city, the average launch price of an affordable housing residential unit has increased from an Rs4.8 million to Rs 7.3 million in 2024. This indicates the price of the affordable housing units beyond the threshold set by the RBI under priority sector housing.