
Mint Explainer: How affordable housing in urban areas got a Budget boost

Summary
- The government has announced an investment of ₹10 trillion to address the housing needs of 10 million urban poor and middle-class families.
The Union Budget for 2024-25 lays out a number of measures for the real estate sector with a focus on affordable, urban housing. Budget housing in large cities has been largely ignored amid a residential boom. Mint explains why finance minister Nirmala Sitharaman's proposals may finally change that.
Renewed push for affordable housing
Under the Pradhan Mantri Awas Yojana Urban 2.0 scheme, the housing needs of 10 million urban poor and middle-class families will be addressed with an investment of ₹10 trillion. This will include ₹2.2 trillion of central assistance over the next five years. The proposal, and another one to bring back interest subsidies, make for a positive move to support the affordable housing segment that has faced many challenges.
In June, with an aim to expand the PMAY scheme, the Cabinet had said the government would assist in the construction of an additional 30 million rural and urban households, underscoring Prime Minister Narendra Modi’s ‘Housing for All’ mission.
How will the fresh allocation help?
The significant allocation towards urban housing will help increase construction, boost housing supply, and revive the affordable housing segment in cities, where private developers have largely focused on premium housing.
More such incentives are needed to help expand the property markets beyond the metro cities, and address housing requirements, real estate analysts said.
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The PMAY scheme is particularly significant in cities as affordable or budget housing projects are few and far between, and have seen tepid growth since the pandemic. Given the low margins in such projects, the role of the government is critical in ensuring low-income housing supply across cities. According to Anarock Research, the sales share of homes priced below ₹40 lakh fell from 38% in 2019 to 20% in 2024.
What was the status so far?
Since the launch of the Pradhan Mantri Awas Yojana for urban and rural (Gramin) housing in 2015 and 2016, respectively, nearly 42.1 million houses have been sanctioned. As of 10 June, under PMAY-U, 11.8 million houses have been sanctioned, while about 836,700 houses have been completed. The proposal for constructing more houses under the scheme, especially in urban areas, is good news for the sector.
What about rental housing?
The finance minister has suggested a regulatory and policy framework to create a transparent rental housing market. This could help create a much-needed rental housing supply. Rental housing with dormitory-type accommodation for industrial workers has also been proposed in the public-private partnership (PPP) mode. The Budget also spoke about enabling policies and regulations for efficient and transparent rental housing markets, but no direct solutions were offered.
Focus on overall urban development
Urban development is one of the nine priorities laid out by the finance minister. The emphasis on encouraging state governments to reduce stamp duty, and lowering duties further for women home buyers, are positive and point towards reforms in the overall urban development scheme.
This could bolster housing growth and make affordable housing more accessible. Moving towards a transparent land registry market through GIS mapping and digitization of land records are also crucial steps as part of the next generation of reforms laid out by the Budget. The proposal to set up plug-and-play industrial parks near 100 cities would be key to supporting the manufacturing sector's rising demand for good quality logistics facilities.
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