Population Growth & Housing Affordability

Population Growth & Housing Affordability
Jul 2021 , by , in Realty+ Connect

Housing affordability is the factor of demand and supply dynamics and is directly impacted by the rate of urbanization and population growth. This World Population Day, Realty+ analyses the trends and challenges in addressing housing demand.

World population day celebrated on July 11 aims to increase people’s awareness on various population issues such as gender equality, poverty, health and human rights. Under the shadow of the pandemic, it becomes even more imperative to focus on population growth, health and the basic need of shelter.

Rapid urbanization due to rising population is considered to be the primary reason for pushing up the prices for renting as well as buying of homes across the country. Affordability is further eroded due to limited supply in cities that results in urban slums. Moreover, as the new housing supply is often in city peripheral areas, the connectivity infrastructure and transportation access comes in the picture.


Since 2018, India’s working-age population has grown larger than the dependent population consisting of children and senior citizens. This youth bulge is going to last for 37 years. However, the current economic slowdown has led to rise in unemployment and growth decline in various sectors and businesses, combined with huge population, it has led to inequalities of income, access and opportunities. While, policy support is essential to make full utilisation of India’s demographic dividend for development of the economy, the challenge also lies in providing liveable housing settlements for the growing population.


Pradhan Mantri Awas Yojana – Urban (PMAY-U), a flagship Mission of Government of India being implemented by Ministry of Housing and Urban Affairs (MoHUA) plans to provide homes to 18 million households in urban India and nearly 30 million households in rural India by the year 2022. In addition, recently introduced Affordable Rental Housing Complexes (ARHCs), a sub scheme under PMAY-U endeavours to provide labourers in industrial sector and non-formal urban economy, access to dignified affordable rental housing. The Special Window  for Affordable & Mid-Income Housing (SWAMIH) Fund too targets funding stalled residential project so that they can be completed on time to accommodate housing demand. The recently approved Model Tenancy Act further provides for an organized rental housing market in coming years with projected 11 million homes coming in the rental market that will help ease housing shortage.

However, all these initiatives seem to fall short of addressing the housing demand across Indian cities. Some of the major roadblocks include, scarcity of land, land acquisition, unmaintained property records, project approvals and even the pace of construction and slow implementation of approved initiatives. Furthermore, lack of incentives is keeping the private participation at bay.


India is projected to have the fastest growing urban population in the coming decades among the BRICS. Providing liveable housing is an ever-growing challenge, as demand for housing will rise with the population growth and the migration from rural to urban areas. Although, housing has been a top policy priority for a long time in India, but has had mixed results.

Year 2021 has seen rising housing affordability and with population migration to tier-II cities in the wake of the pandemic and work from home, tier-2 and tier-3 markets are becoming the focus for affordable housing projects. However, given the population and its huge pent up demand for housing, there is still immense work at hand.

First and foremost, the state governments need to realize the extent of urbanization as villages and towns start progressing towards characteristics of urban areas. Almost every sixth person on Earth lives in India. By 2030, the UN estimates that more than 40% of Indians could already be living in megacities.

The peri-urban areas, small and medium towns are in dire need of attention. While they have progressed economically, the infrastructure needs upgradation for planned growth.

Secondly, the master planning of the newer urban settlements in keeping with the existing and future population can empower municipalities to regulate built spaces and implement urban town planning strategies. With newer urban centres coming-up, it will help ease pressure on the metro-cities grappling with informal housing.

Lastly, simplification of property records will enable the property owners to take advantage of government schemes to build and upgrade their own homes. Transfer of Development Rights (TDR) to incentivise developers to in-situ rehabilitate slums too can help in addressing the informal housing settlements. With Model tenancy Act and AHRC coming in being, it is for the states to push through rental reforms, so as to open up un-utilized housing stock.

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