India’s real estate sector last saw a boom in the five years from 2002 to 2007. The dream run of real estate ended in 2008 and the markets crashed. Since then, the real estate sector has not been able to recover. There have been spurts of growth for a few quarters but sustainable recovery is still elusive. Moreover, inflation and the global downturn played its own part in prolonging the slowdown.
Affordable housing
Out of sheer necessity to reduce prices in order to fuel demand, the idea of affordable housing is being discussed in real estate circles. Affordable housing is not low cost housing though these terms are confused very often. While low cost housing is targeted at economically weaker sections of the society, affordable housing is targeted at all types of buyers.
Affordable housing is a new growth area where builders and property dealers are focusing to spur demand for homes. Given that the slowdown in the real estate sector is here to stay, builders have no other option but to build homes that people can afford.
The numbers differ on what defines affordable housing. The most used numbers for affordable housing is anywhere between 3 to 5 years of net salary of an individual or family depending upon the economic growth and prevailing sentiments. Hence, if a person earns Rs 6 lakh net salary per annum, his or her capacity to buy a home is between Rs 18-30 lakh.
How this works
The purchasing power of all classes is determined and a value assigned on the basis of the location. Builders then try to offer properties within this range. This is called affordable housing.
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