Housing is a major issue that concerns millions across the world, and the issue therefore has a greater universal appeal. Housing in itself has many facets attached to it, but primarily the fundamental tenets of housing rests on the real estate avenues of buying a unit and the renting a unit. Throughout the globe these two elements have plagued the discourse on many levels. The housing bubble that burst also led to the debacle of the 2008 financial crisis that devoured tranquility of the global economy.
Affordable housing in India
In the Indian context, welfare policies, that are part of mixed economies, like India result in some form of affordable housing in the country. But those policies neither cover large population nor provide options to individuals across the socio-economic spectrum. With gradual inflation, the prices of housing and renting have naturally increased. And the segment that is most affected by the developments in this space are urban territories. Urban territories are in focus, as they have greater stagnant and mobile population, that persists on small areas, as compared to rural settings, and unlike in rural settings, urban centers also have to accommodate commercial avenues.
Surge in rental prices in cities
In recent report published by online real estate website Magicbricks, Indian cities have registered a cumulative of 17.4 per cent year-on-year (YoY) rise in house rents for the period October - December 2023. 13 major cities were taken into consideration. In this millennium city- Gurugram topped the list with a 31.3 per cent growth.
Now, after this, when we look at a report from by The Knight Frank Affordability Index from 2023, the apparent housing affordability in India’s major property markets has risen. This was attributed to rise in income levels and improved macro-economic indicators. Despite higher mortgage rates in 2022, the 'affordability level', which is the income proportion needed to cover monthly instalments for an apartment, witnessed a positive trend.
In a country where the GDP per capita is below the mark of USD 2000, housing is a major concern, and a said dichotomy in the prospects of a place, raises more questions, than answers, that it gives.
Now, after Gurugram, it's other NCR neighbours including Greater Noida ranks second with 30.4 per cent YoY increase in rentals. This is followed followed by Bengaluru at 23.1 per cent YoY rise.
The 'affordable' houses
In the Knight report, The National Capital Region (NCR), which includes the aforementioned regions of Gurugram and Greater Noida, saw its affordability improve to 27 per cent in 2023 from 29 per cent in 2022. This displays a certain dichotomy in a city/region that houses a lot of commercial apparatus instated in them. This is a problem as it hits interim settlement, with many possibly opting to purchase the relatively affordable flats, only to leave them vacant, but under possession, like many cities, including that of Mumbai have seen. Mumbai, meanwhile continues to beyond the reach of most as the city is the only region beyond the affordability threshold of 50%, raising questions of the livability of India's business capital.
Rise in higher disposable income
In both the reports, the ostensible rise in disposable income is sighted or attributed as one of the major reasons behind the development that they observed. But these developments are happening at a time, when inflation is relatively low, the said purchasing power through higher disposable income would be tested. And the individuals who are said have gained additional disposable income, are the ones who had access greater wealth even before, thereby not expanding the number of individuals in the bracket, who have this said purchasing power.
Amongst the cities, that have displayed coherence in both reports, Ahmedabad stands out, as the city saw a 6.6 per cent rise, along with being the most affordable, when it comes to housing.
The road ahead in 2024
A stable GDP growth and moderation in inflation in 2024–25 could according to the Knight Report, will see affordability strengthen. This would also have to be accompanied with an uptick in per capita GDP numbers, and regulation of rents, so that renters are not exploited. Regulation is also crucial, as despite apparent 'affordability' of purchasing, buying a unit is not the most pragmatic option for many, renting therefore becoming the only option, and a surge in that paradigm will only exacerbate the issue of housing.
