T N Ashok
By the time you finish reading this sentence, another middle-class Indian family has abandoned the dream of owning a home. Across India’s sprawling cities—from Mumbai’s glass towers to the expanding edges of Pune and Hyderabad—homeownership has shifted from aspiration to impossibility for millions of salaried professionals..
The numbers tell a brutal story: Mumbai now requires 15 years of household income to buy an average home, compared to 7.1 years in New York and 8.5 years in London. Delhi-NCR demands 12 years, while even Bengaluru and Hyderabad hover near 10 years—making India’s metros more unaffordable than most global financial capitals.
Between 2022 and 2024, India’s inventory of homes priced under ₹1 crore—the affordable range for middle-income buyers—collapsed by 36 percent nationally, plunging from 310,000 units to under 200,000. The decline was catastrophic in key cities: Hyderabad lost 69 percent of affordable stock, Mumbai 60 percent, and Delhi-NCR 45 percent.
This wasn’t a market correction. It was a fundamental reordering. While affordable housing evaporated, luxury and premium launches soared—nearly doubling in Bengaluru and the National Capital Region. By 2024, over 50 percent of new launches targeted premium and luxury segments, while affordable housing accounted for less than 20 percent.
For software engineer Rohan Thomas in Hyderabad, the shift was personal: “Builders quoted ₹12,000 per square foot for completed units. That’s an impossible EMI on a 20-lakh annual salary.” His story echoes across India’s cities, where monthly mortgage payments now absorb over 60 percent of average household income—far above the 50 percent affordability threshold.
The most fundamental shortage is land itself. In major metros, acquisition costs have exploded, now comprising 30-40 percent of total project costs, up from historical norms of 15-20 percent. In Pune, land rates jumped from ₹5,000-₹7,000 per square foot to ₹10,000-₹18,000 in prime zones within just a few years. Mumbai’s ticket prices rose over 50 percent in four years.
“The cost foundations for affordable housing have shifted dramatically,” says Sujay Kalele, CEO of TRU Realty. In cities constrained by geography—Mumbai’s islands and coasts, Delhi’s historical urban fabric—every square foot commands a premium that feeds directly into buyer prices.
Even when land is available, construction costs have ballooned by nearly 40 percent since 2020. Average costs jumped from ₹2,200 per square foot in 2021 to ₹2,800 in 2024 across major cities. In top metros, luxury construction alone exceeds ₹5,000 per square foot, with premium projects in Mumbai surpassing ₹25,000.
These input inflation pressures squeeze smaller developers and affordable projects most severely, while premium builders absorb and pass through costs to wealthy buyers.
Rising costs have made the business case for affordable housing nearly impossible. A senior executive at a Mumbai-based developer explained bluntly: “On a ₹70-lakh flat, margins are razor thin. In a ₹4-crore apartment, risks are manageable.”
The math is stark. Building an affordable home involves land costs (₹2,500-₹5,000 per sq ft), construction (₹2,800-₹5,500), approvals and taxes (₹600-₹1,000), and financing and marketing (₹500-₹800)—totalling ₹6,500-₹12,000+ per square foot delivered to buyers. With regulatory delays extending 3-5 years in metros and financing costs at 9-11 percent, developers find premium segments far more attractive.
Builders face mounting financing costs that make affordable projects unviable. Long approval delays tie up capital, while construction-linked payment plans—where buyers pay 10 percent on booking, 10-15 percent on agreement, and the balance through construction—create cash flow challenges that smaller developers struggle to manage.
One IT professional in Bengaluru captured the buyer’s pain: “We paid EMIs and rent for four years before getting keys.” Such delays, combined with cash-flow diversion by developers and litigation over land titles, have eroded trust across the sector.
The central government’s Pradhan Mantri Awas Yojana (Urban) aimed to deliver 20 million affordable homes nationwide. In practice, achieving targets in high-growth metros has proved challenging, constrained by land costs and developer economics.
States like Maharashtra and Karnataka have experimented with higher Floor Space Index ratios, faster approvals, and subsidized land through public-private partnerships. Yet critics argue these measures fall short. “Relaxing FSI is helpful, but without infrastructure upgrades and land pooling, it’s like adding floors without foundations,” says urban economist Ravi Singh.
A senior housing ministry official acknowledged: “Affordable housing requires land pooling and state participation.” But implementation remains uneven.
The vertical solution and its limits: Faced with land scarcity, Indian cities are building upward. Towers pierce skylines in Mumbai, Bengaluru, and Hyderabad, with even tier-2 cities hosting increasingly tall residential blocks. Mumbai’s recently completed Minerva Tower, designed by architect Hafeez Contractor and standing over 301 meters, symbolizes this vertical future.
“In dense urban nodes, the only direction left is up,” says Mumbai-based urban planner Anita Mukherjee. “But vertical growth must be matched with transit, utilities, community spaces—otherwise we just stack people on top of congestion.” Contractor himself warned: “Vertical cities are inevitable. The question is whether they are liveable.”
India’s housing crisis stands apart globally. While India faces a projected shortfall of 25-30 million units by 2030, Germany aims to build 320,000 apartments annually, the US needs about 450,000 units yearly, and the UK targets 300,000. India’s deficit dwarfs advanced economies—not in construction volume, but in affordability and alignment with demand.
Housing price growth in India ranks in the top 10 worldwide at nearly 9.6 percent annually, even as US and European markets experience softer conditions. Yet institutional investment through Real Estate Investment Trusts remains at 20 percent of the market—lower than mature economies like the US or Singapore—though projected to reach 25-30 percent by 2030.
The sector remains plagued by loopholes that encourage under-reporting of sale prices to evade stamp duty, fuelling black-money transactions that distort true pricing. Developers collecting advances and abandoning projects remain common, while illegal land aggregation from slums and unauthorized colonies continues.
The Real Estate Regulation Act (RERA), introduced in 2017, aims to address these issues, but as a senior Karnataka housing official noted: “RERA exists, but enforcement remains uneven.”
What’s the way forward ? India’s urban housing shortage is not insurmountable, but requires bold action: genuine land pooling and redevelopment to unlock supply; tax breaks, faster approvals, and financing support for affordable housing; transit-oriented development linking homes to jobs; and digital price transparency to reduce corruption and speculation.
Without these reforms, India risks building cities that soar vertically but exclude the middle class they were meant to serve. As one NITI Aayog adviser observed: “Urban India needs rental housing, not just ownership.”
The crisis is no longer about the poor alone. It’s about a middle class that earns well, works hard, and yet finds itself permanently renting—or commuting hours each day from distant peripheries. The dream of urban homeownership remains just that: a dream for the many, a reality for the few. (IPA Service)
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