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Housing shortage 19 million units; units lying idle 11 million: "Paradox" of India's urban growth paradigm

By Rajiv Shah
India’s urban housing shortage, which was estimated to be 18.78 million units by 2012-end, is expected to grow by a “compound annual growth rate of 6.6 per cent over the next decade, the Housing and Land Rights Network (HLRN) has said, adding, 95 per cent of this shortage is of the economically weaker sections (EWS) and lower income group (LIG).
A network of housing rights NGOs across India, HLRN, in a study released recently, has says that while India’s total number of housing shortage will reach 38 million units by 2030, “over 70 per cent of migrants are least likely to afford a house at market prices.”
The study, a status report titled “Housing and Land Rights in India”, further estimates that while “more than 30 per cent increase in Tier I and Tier II cities”, the Tier IV cities “will also witness an acute shortage of affordable housing as these cities will account for 60 per cent of the gap between affordability and the market rate.”
Tier- I cities are those with a population of 100,000 and above, Tier II cities with a population between 50,000 and 99,000, Tier III cities have a population between 20,000 and 49,000, and Tier 4 cities have a population between 10,000 and 19,999.
However, the report believes, “Housing shortage, in terms of the gap between demand and supply, is not so much due to the pressure of population on the city but is a consequence of unrestrained commercial development of housing for the urban elite at the expense of investment in housing for EWS.”
Pointing towards India’s “paradoxical economic growth paradigm”, the HLRN estimates that, as against such huge housing shortage today, there are 11.09 million vacant houses in the country. It adds, this is because of “Rampant speculation in the housing market.”
“Almost Rs 47 trillion was invested in the real estate sector between 2008 and 2014”, it says, adding, “Speculators tend to buy property during the construction stage, causing the developer to raise prices to enable early investors to make gains. Developers also tend to create the impression that housing units have been ‘sold out’, while real estate agents attempt to sell this stock at higher prices by creating a situation of artificial scarcity.”
“The National Housing Bank monitors housing prices in India through an index called Residex. The index indicates that housing prices in 2014 had more than doubled since 2007 in Faridabad, Ahmedabad, Pune, Bhopal, Kolkata, and Mumbai; in Chennai, prices had more than tripled”, the report says.
“To maintain stable demand in the housing market, private developers are reducing sizes of houses without decreasing the cost per square foot. Between 2010 and 2015, the average size of a residential unit reduced by 26 per cent in Mumbai, while in Bengaluru, Chennai, and Kolkata, sizes reduced by 22 to 24 per cent”, says the report.
As a result of the acute shortage of affordable houses, the report states, the Census 2011 estimates, 938,384 persons are homeless in urban areas, which “an underestimation”, as it “does not include those sleeping in places of work because they do not have housing”. According to independent estimates, “the total number of homeless persons in India at about 2.3 million, with 150,000–200,000 in Delhi, and over 200,000 in Mumbai and Navi Mumbai.”

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