Affordable Housing in India: A Closer Reality Despite Challenges
The year has been a mixed bag for the real estate industry, with housing supply slowing down but record investments coming in. Industry experts believe that demand will stabilize as sales are likely to be lower compared to 2023. However, the affordable housing segment is showing promising signs of improvement.
Affordable HousingReal EstateProperty PricesGovernment InitiativesPradhan Mantri Awas YojanaReal EstateJun 29, 2025
Unsold stock in the affordable housing segment shrank by 19 per cent to about 113,000 units by the end of the first quarter of calendar year 2025. Anuj Puri, chairman of Anarock Group, says there is strong demand but “developers have largely avoided this segment, resulting in minimal new launches in recent years”. Consequently, people are purchasing from the existing inventory. Rising costs of land acquisition, construction, and approval have also pushed builders to prioritize premium projects, “as affordable housing offers very thin margins. Furthermore, property prices have soared across cities, exacerbating the affordability crisis.”
But things could change after the government's recent initiatives to boost the affordable housing sector. These initiatives include financial incentives, streamlined approval processes, and subsidized land costs. The government's Pradhan Mantri Awas Yojana (PMAY) has been a significant driver, aiming to provide affordable housing to all by 2022.
The real estate industry has seen a mixed performance over the past year. While housing supply has slowed down, record investments have flowed into the sector, indicating a strong interest from investors. However, the gap between supply and demand in the affordable housing segment remains a critical challenge. Developers are hesitant to enter this market due to the thin profit margins and high costs involved.
Despite these challenges, there are signs of improvement. The government's focus on affordable housing, coupled with the growing demand, is expected to drive more developers into this segment. Financial institutions are also showing more interest in funding affordable housing projects, which could further boost the sector.
Industry experts believe that the demand for affordable housing will stabilize as sales are likely to be lower compared to 2023. However, the long-term outlook remains positive, with the government's continued support and the increasing need for affordable homes.
In conclusion, while the affordable housing segment in India faces significant challenges, the government's initiatives and growing demand are making it a more attractive option for developers. As the industry continues to evolve, the dream of affordable housing for millions of Indians is getting closer to reality.
Frequently Asked Questions
What is the main challenge in the affordable housing segment in India?
The main challenge in the affordable housing segment in India is the lack of adequate supply due to high land acquisition costs, lengthy approval processes, and construction costs. These factors push developers to prioritize premium projects, leading to a shortage of affordable homes.
How has the government supported the affordable housing sector?
The government has supported the affordable housing sector through initiatives like the Pradhan Mantri Awas Yojana (PMAY), which provides financial incentives, streamlined approval processes, and subsidized land costs to developers and homebuyers.
What is the current status of unsold stock in the affordable housing segment?
Unsold stock in the affordable housing segment shrank by 19 per cent to about 113,000 units by the end of the first quarter of calendar year 2025, indicating a strong demand for these homes.
Why are developers hesitant to enter the affordable housing market?
Developers are hesitant to enter the affordable housing market due to the thin profit margins and high costs involved in land acquisition, construction, and approval processes. These factors make it less attractive compared to premium projects.
What is the outlook for the affordable housing sector in the coming years?
The outlook for the affordable housing sector in the coming years is positive, with the government's continued support and the growing demand for affordable homes. Financial institutions are also showing more interest in funding these projects, which is expected to boost the sector.
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