The problem is further compounded as there are only a few urban centres in India that promise better prospects than rest of the cities and towns - leading to much more pressure on their infrastructure and housing - and resulting in disordered urbanisation.
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Amid the growth of urbanisation, the housing shortage in India has touched 18.78 million units. Approximately 56 per cent of households in urban India now have four or less members, which is a marked change in Indian housing sector in the past 10 years. This trend has significantly increased the demand for housing in the urban context with the growth of smaller families.
Interestingly, it is to be noted that although India's number of households increased by 60 million between 2001 and 2011, the number of houses went up by almost 81 million over the same period. Despite this, the latest official Economic Survey states that there is a shortage of nearly 20 million homes in India. One reason for this is that most builders are catering only to the middle income and affluent population in India and home prices have gone beyond the reach of many during past decade.
While the supply side constraints for low cost and affordable housing include lack of availability of land and finance at reasonable rates, the demand drivers include the growing middle class and growing urbanisation. Real estate developers, private players in particular, have primarily targeted luxury, high-end and upper-mid housing segment owing to the higher returns that can be gained from such projects.
In addition, several structural issues, such as the high gestation period of housing projects, limited and expensive capital, spiralling land and construction costs, high fees and taxes as well as unfavourable development norms are bottlenecks restricting the desired growth in housing stock in India.
The government has acknowledged the importance of the housing issues in the country in the current five-year plan. Smart cities programme is another attempt to improve the situation in urban areas. However, the solution to affordable housing crisis would be focussed efforts on land and housing policy reforms, delegation of power to urban local bodies, fostering innovative housing finance and steps for reduction in project costs and schedule overruns.
Additionally, planned urbanisation and other initiatives of government should ensure that towns and cities are free from slums and simultaneously provide for adequate opportunities for gainful employment as also an optimum quality of life to all citizens. If, and when, this happens will be important to see.
The writer is managing director - Strategic Consulting, JLL India. Views expressed by him are his own and do not reflect the newspaper's policy.