Affordable housing sector is at the pivotal crossroads in India

India’s supply-to-demand ratio for affordable housing across the top 8 cities has plummeted to 0.36 in 2025 (until June), down from 1.05 in 2019, signalling a significant undersupply in the crucial segment.

This year’s data show launches have collapsed to barely a third of sales, underscoring a deepening imbalance that threatens to impact housing affordability and limit buyer choice, according to a joint report on Affordable Housing: Tackling Urban Housing Deficit Through Supply-Side Reforms, by Knight Frank India, and NAREDCO.

The report has highlighted the critical supply challenges faced by India’s affordable housing sector and said that urban affordable housing deficit of 9.4 million units is projected to surge to 30 million units by 2030. However, the challenge is not felt insurmountable.

The report finds that supply continues to lag demand as developers face mounting challenges including high land costs, limited access to construction finance, regulatory delays, and inadequate infrastructure in peripheral urban zones.

“While policy support on the demand side has been commendable, there is a pressing need to address supply-side barriers. Encouraging private sector participation through innovative financing, faster approvals, and land availability will be critical to bridging the gap and ensuring that every Indian has access to dignified housing,” according to Shishir Baijal, CMD, Knight Frank India.

India’s existing affordable urban housing shortage is estimated at 9.4 million units, with demand expected to rise sharply as urbanisation accelerates. By 2030, cumulative affordable housing demand (including EWS, LIG, and MIG) is projected to reach 30 million units. The ratio highlights a dramatic collapse in new launches, falling to nearly a third of sales in 2025.

This shortfall, combined with incremental affordable housing demand of 20.7 million units by 2030, will push total affordable housing needs to 30 million units, of which 79 per cent will be concentrated in EWS and LIG households.

The report points to a sharp imbalance between sales and launches. India’s affordable housing sector faces persistent challenges in expanding supply to keep pace with the country’s fast-growing urban population.

Although policy initiatives like the Pradhan Mantri Awas Yojana (PMAY), Affordable Rental Housing Complexes (ARHCs) have laid the groundwork, the actual construction and delivery of affordable homes remain far from adequate.

The share of affordable housing till June this year, i.e value of housing units priced under INR 5 million stood at 17%, a sharp decline from 52.4% in 2018, thus, indicating decline in affordable housing supply in Indian cities. The receding number of launches in the affordable housing units is primarily attributed to the bottlenecks hindering private participation.

Another key finding of the report is the limited private capital flowing into the sector. Between 2011 and 2024, private equity inflows into affordable housing totalled $1.9 billion, accounting for just 7.8 per cent of the residential sector. Foreign funds accounted for merely 10.2 per cent of the capital inflow into affordable housing segment between 2019-24.

“High land costs, inadequate institutional investments, and infrastructure deficits in peripheral locations continue to restrict developer participation,” said Gulam Zia, Senior Executive Director– Advisory, Valuation, and Research, Knight Frank India.

“The fact that new supply in this segment has dropped sharply while demand continues to grow is a matter of concern. Limited private investment further widens the gap. This Convention is the right platform to call for bold supply-side reforms— unlocking PSU land for housing, rationalising FSI norms, and enabling subsidised construction finance. These measures can restore affordability, attract private participation, and ensure that affordable housing becomes the real engine of inclusive urban growth in India,” according to G Hari Babu, President, NAREDCO.

I own industrial land in Mangalore and leased it for a company. What are the tax deductions available while computing yearly income? Harish Kamath, Sharjah.

When you receive rental income from any type of property, whether a commercial, residential or industrial, a standard deduction is permissible in respect of repairs, etc. which is equal to 30 per cent of the annual value. This deduction is applicable whether or not you actually spend the money on repairs. This will enable you to reduce the burden of income-tax payment to the extent of 30% on your rental income.

We are three children and my sister’s name has not been mentioned in the Will. Can she claim ownership in the property? Praneeth Kumar, Dubai.

Assuming that your father was a Hindu and the property was self-acquired by him, you cannot stake a claim because he has the right to will to any one, he wants. In the event of you are feeling that the will was prepared fraudulently or injustice has been done to you, as a class I legal heir, you can challenge the validity of the will through a court of law.