Govt bonanza for affordable developers, rate increased to ₹5,000 psf

The Haryana government has increased the allotment rate of affordable housing units by an average of 20% in a bid to revive the sector. The rate in Gurugram and Faridabad has been raised from INR 4,200 ($60) per sq ft to INR 5,000. Developers have welcomed the move, but housing experts have warned that it will make affordable homes more expensive and less accessible to the common man.

In a bid to revive the affordable housing sector in Haryana, the state government on Friday increased the allotment rate of apartment units under affordable group housing by an average of 20%.

Govt bonanza for affordable developers, rate increased to ₹5,000 psf

In Gurugram and Faridabad, which have been designated as hyper potential zones, the rate has been increased from ₹4,200 per square feet to ₹5,000.

The decision was taken at a cabinet meeting chaired by chief minister Manohar Lal Khattar on Friday.

The move to hike the rates was welcomed by Gurugram-based developers, who said that the sagging interest in affordable housing will be revived by the rate hike. Housing experts, however, said that the move will make affordable homes more expensive.

The affordable housing policy was notified by the department of town and country planning on August 19, 2013.

The government also directed that after the amendments the rates of balcony have been increased by ₹200 sq. ft. which becomes ₹1,200 per sq. ft. so that the required construction cost could also be recovered by the developers through balcony by increasing its rate.

Pradeep Agarwal, founder and chairman, Signature Group said that the rate hike was required as otherwise the affordable housing projects had become unviable. “The cost of inputs such as steel and cement and other things have risen considerably in the last these years. More importantly the cost of land has multiplied and it had become unprofitable to launch affordable projects at the earlier price. this is a welcome move and will help boost the affordable market,” he said.

The experts,however, did not welcome the move and said that time hike was too high and it would ensure that affordable housing would become unaffordable for the common people. The price hike is too steep and unjustified. It will severely hit affordability and take homes out of the reach of the common man. Already plotted developments under Deen Dayal Upadhyay Jan Awas Yojana of Affordable Housing have been made unviable with developers raising prices beyond ₹1 crore, they added.

Vinod Behl, a city based realty expert said, “Considering that it is mostly end users who have been buying homes under the Affordable Housing Policy of the Haryana government, the move will prove to be counter productive to state government’s affordable housing policy and the Centre’s policy of ‘Housing for All’. Besides hitting the home buyers, it will hit developers also as sales will go down , especially as the share of affordable homes in the overall housing sales has already come down due to rise in property prices and home loan rates.”.