Escalating construction expenses alongside heavy tax burdens on residential properties have severely constrained the delivery of affordable housing developments. Apex real estate body CREDAI announced on Friday that prevailing cost dynamics make constructing entry-level homes priced at or below 45 lakh rupees virtually unfeasible for developers. To address these operational constraints, the builders body has approached the central government, seeking targeted policy incentives to revive both demand and supply for lower-budget residential units.
Call to Overhaul Existing Affordable Housing Parameters
Addressing a press conference on Friday, CREDAI President Shekhar Patel argued that the official criteria defining affordable housing urgently require an overhaul. He recommended that the central government completely do away with the current ceiling of 45 lakh rupees per apartment. Patel expressed optimism that authorities would act on this industry recommendation. Acknowledging operational realities, he admitted that developers are currently unable to supply an adequate volume of affordable homes under existing rules.
Government Levies Consume Between 30 and 50 Percent of Property Prices
Outlining the bottlenecks hindering affordable housing supply, Shekhar Patel identified soaring land prices, rising material and labor costs, and elevated levies as the core roadblocks. Notably, real estate developers remit between 30 and 50 percent of a home's final selling price to the central government, state administrations, and local municipal corporations in the form of taxes, development fees, and charges. Patel stated that industry representatives are actively engaging with administrative bodies to navigate these regulatory pressures and overcome industry hurdles.
Demand to Eliminate Cost Ceiling and Rely Solely on Unit Area
CREDAI anticipates that substantive policy interventions may materialize over the next 6 months to spur consumer appetite and expand housing availability. Regarding structural revisions to the affordable housing bracket, Shekhar Patel mentioned that constructive discussions are underway with the government. He emphasized that the financial cap of 45 lakh rupees should be abolished entirely. Instead, eligibility for affordable housing classification should hinge solely on unit dimensions, maintaining a limit of 60 square meters in metropolitan regions and 90 square meters in non-metropolitan cities.
