Does India really face a housing shortage?

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housing shortage

Indian realty is facing acute housing shortage due to the mismatch between what is supplied and what is in demand. In other words, there is a huge gap between the target group for whom houses are being built and those who actually are in dire need of housing.

A recent report by CBRE states that even though India faces a housing shortage of nearly 19 million houses, there are over 10 million houses lying vacant in the country. This highlights the Indian housing paradox. It is rather ironical that a country reeling under the pressure of not being able to provide housing to a major chunk of its population, should have houses lying vacant for want of residents.

It is amply clear that the country definitely does not lack the resources or skills required to develop housing that would cater to one of the largest populations in the world. So, why are people still homeless in the country?

One of the major reasons for this disturbing trend is that homes are not specifically being built for those who need them. It is the economically weaker section (EWS) and low income groups (LIG) that are homeless but the umpteen number of residential projects being released into the market are way too expensive for them and cater to the high income groups.

“The major reason for the supply-demand mismatch is the lack of formal housing options for those belonging to EWS and LIG. In addition, lack of easy access to formal credit such as home loans from banks leaves them with little option but to settle for urban slums and unauthorized settlements,” says Anshuman Magazine, Chairman and Managing Director, CBRE South Asia.

Even if affordable options are available, these are far and few. Quality of construction and presence of available infrastructure are major issues with these homes. The housing schemes by Delhi Development Authority (DDA) highlight these issues, where several housing units under the affordable tag, lay vacant. Some of these are situated in far-flung areas, such as Narela, that are deprived of basic infrastructure and public transport. This makes it difficult for people to live and commute for work on a daily basis.

Commenting on how such housing schemes could be more useful to the masses, Anil Sawhney, Associate Dean, Director and Professor, RICS, says that the ‘Housing for all by 2022’ mission (HFA) aims at ‘in-situ redevelopment’ that uses land as a resource, coupled with strategies such as additional Floor Area Ratio (FAR)/Floor Space Index (FSI) and Transferable Development Rights (TDR). This will allow private participation and reduce displacement of urban poor to urban fringes.

“The scheme also defines housing with adequate basic civic services and infrastructure services like sanitation, water, electricity etc. While this provides emphasis on the importance of an integrated solution, the actual implementation is vague. A more holistic view is needed in this regard,” adds Sawhney.

Most realty experts believe that programmes such as AMRUT, HRIDAY, Smart Cities and HFA must work in an interconnected manner to address the urban problems faced by our cities. Sawhney continues, “Housing ‘pockets’ must be identified where public transportation can be provided either through public or public-private partnerships. Ultimately, we will have to design our cities such that we have work places near affordable housing, public amenities within walking distances and a safe environment for our citizens. Provisioning of Mass Rapid Transport System in urban corridors is a must.”

Another reason for the high vacancy level in the residential market is the high investor activity in the housing sector. Being one of the most profitable investment avenues, the housing sector has always remained a favourite among investors looking to park their surplus earnings. As they do not invest for self-use, it adds to the vacancy levels. NRIs also contribute towards the unoccupied inventory in the country.

What is the solution? “Incentives, policies and regulatory framework that encourages rental housing is needed desperately to address the paradox of vacant housing in the face of acute housing shortage. Best practices such as ‘registered social landlords’ or ‘housing associations’ must be explored to encourage rental housing. Issues such as the type and nature of housing supply also needs intervention. At present, the size and specifications of housing that is being built on the limited supply of land does not really match the housing needs of the urban poor,” explains Sawhney.

Thus, it not right to say that India lacks housing units. What it lacks is the optimum utilisation of the available resources. It comes across that announcing policies and programmes is not enough. To handle the ‘artificial’ housing shortage, implementation of foretasted policies is the key.


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  • Comments
  • Amit Kathpalia October 5, 20156:14 pm

    True, the affordable housing segment has a major shortage and this is where the Govt has to step in for providing easier loans, land etc. Another aspect that needs to be considered is motivating/giving incentives to slum dwellers to shift to these colonies once they are constructed. Most people staying in city slums today do not want to shift even if they get better accomodation since slums are well connected in terms of road transport , have free unauthorized electricity etc. As far as financing is concerned, another concept that needs to be tried is crowdfunding which has caught on in a big way in USA. Unfortunately, in most people including Govt functionaries have least amount of trust in builders, since most builders , time and again , have misused whatever facilities / concessions that have been given to them.

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