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Government is considering a proposal to raise the price limit for classifying homes in the “affordable housing” segment for cities like Delhi and Mumbai to Rs 75 lakh from the Rs 45 lakh cap that is in place at present.

“Classifying affordable housing as units up to Rs 45 lakh is unrealistic given the high price of land in cities, Dinesh Kapila, Economic Advisor at the Ministry of Housing and Urban Affairs (MHUA) said on Friday.

“In response to the industry's call for improving the definition of affordable housing, a proposal has been forwarded to the Union Finance Ministry. We are particularly concerned about high land prices in metropolitan cities like Delhi and Mumbai, which make the current price range for affordable houses of less than Rs 45 lakh inadequate.

“We have requested the Finance Ministry to consider raising this threshold to at least Rs 75 lakh,” Kapila said while speaking at the 12th Real Estate Conference and Excellence Awards programme, organised by the Associated Chambers of Commerce and Industry of India in Delhi.

Classification under the affordable housing segment entitles buyers to avail of various government incentives and easier availability of loans. 

Highlighting the huge growth potential of India’s real estate sector, Kapila said its size is likely to expand to around $1 trillion by the end of 2030 and the sector’s contribution to the country’s GDP would be around 13 percent by 2026.

Highlighting the importance of the Real Estate (Regulation and Development) Act, 2016, Kapila said that since RERA came into force close to 86 percent of the projects nationwide have been delivered to homebuyers which is a huge achievement.

He said RERA was a path-breaking legislation which is playing a crucial role in addressing and fixing problems that have been plaguing the country’s real estate sector.