Affordable housing is fundamental to smooth functioning economies, but even the best-performing economies are struggling to meet this need, world over. The rapid urbanization and income growth are pushing a section of the urban household to even forego basic essentials like health care to afford decent housing.

Affordability gap has been defined by Mc Kinsey Global Institute as the difference between the cost of an acceptable standard housing unit (different in each location) and what a household can afford to pay using not more than 30% of their income.

Building of affordable houses can happen mostly through public funding only. The Government an contribute by lowering cost of land, construction, offering finance etc. making housing affordable to 80% of households earning median income.

What are the possible ways of bringing down construction costs? The government can release unused land for affordable housing apart from allowing more FSI on a plot of land. Thirty percent project costs can be reduced by using standardized design, assembling houses using prefabricated components. All this, apart from low interest rates and consolidated buying that can reduce expenses of construction.

Affordable housing presents an opportunity to the construction industry, worldwide, a market of $200 billion to $250 billion revenue annually.

It is only wise to add utilities expenses while calculating cost of housing affordability. So a higher energy cost can turn the affordable rentals to unaffordable. Housing offered in faraway places which has low density makes it necessary for the household to own a vehicle, making the cost of housing a combination of transportation cost as well.

One way to meet the challenges could be to adopt green affordable housing, which would meet all conditions of sustainability, durability, health and safety, and energy and water efficiency.

Some of the options available in India to construct low cost housing are use of concrete hollow bricks, using brick arches instead of concrete lintels, filler slabs for thermal insulation, and ferro cement shells and slabs.

The idea is to set a minimum standard for affordable housing and this can be done by policy makers, for each of their cities.

Source : IKIA Research