Mismatch in demand and supply of affordable housing

The situation of affordable housing in the cities of the country is getting worse. The demand for affordable category houses has decreased significantly in recent years as the potential buyer class was badly affected by the pandemic. Apart from this, a huge increase in home loan interest rates and housing prices has also made the situation difficult for low-income families.

The gloom caused by the pandemic and the rising cost of construction and labor have forced real estate developers to shift their focus from affordable houses to premium and luxury category houses. These reasons have created a gap between demand and supply which is affecting affordable housing units.

This is happening despite positive developments such as increasing urbanization, improvement in income levels and formalization of the economy. While these reasons are strengthening the housing market. In recent years, the prices of affordable category housing have also increased drastically, which has made the problem more serious. Financial unavailability of projects, lack of availability of affordable land and excessive reliance on debt by both developers and potential buyers are also constraints.

High housing prices are a drag on the economy. It erodes the wage premium for urban workers and makes it difficult for employers to retain talent. In this context, there is a need for strong planning in governing the housing market.

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