—Views of Vivin Mathew and Shafique Ansari – Directors, Irasa Housing
Last week the Maharashtra State Government passed a Government Order (GO) that will kill all affordable housing around Mumbai. The GO states that the three main areas around Mumbai where affordable housing is currently being developed have now become Green Zones. The areas of Shahapur, Palghar and Raigad, where most homes are sold in the sub Rs. 25 lakh range, have now become No-Development Zones except for very few slivers of land.
In the last 15 years these three areas have, estimates say, delivered around 5 lakh homes in the sub Rs. 25 lakh range. No other area close to Mumbai hass been able to produce as much supply of affordable housing as these. Now only those projects which already have approval will come up. No new projects in these areas will be approved. With lower supply, expect prices to dramatically go up in the next few months.
Prior to this GO being issued, the areas of Shahpur, Palghar and Raigad were Free Zone where a developer could buy land and use it for residential or non-polluting industries. These were the only areas around Mumbai where land was available at less than Rs. 1 crore per acre. Therefore it was the perfect feedstock for affordable homes. Now that is gone.
Home prices will go up all over Mumbai
Over the next few months, we expect all developers that have approved projects around Mumbai in these areas to tighten prices knowing that with lower supply coming in, prices are bound to increase.
The prices of the tiny slivers of land in these areas where development is still allowed will dramatically go up. Again leading to increased prices of homes.
Prices within the far flung suburbs of the city of Mumbai will also tend higher. Areas like Panvel, Thane, Kalyan, Virar will all see a hardening of prices as the competition from the lower priced homes substantially reduces.
All this means that the lowest priced homes around Mumbai will now be in the Rs. 30 lakh range. For someone to be able to afford that, they will have to earn at least Rs. 50,000 per month.
Land prices will increase
As Affordable Housing developers seek to stay in business, they will start trying to buy land within the development areas in Mumbai’s far flung suburbs. This will ensure that land in those areas will go up almost immediately. Again that will mean no more affordable housing around Mumbai.
Increased Job Losses
Another unfortunate aspect of this order will be a loss of jobs. The only sector of Mumbai’s housing market that has been able to keep its head above water in the last few years has been Affordable Housing. This sector, directly and indirectly, employs close to 10 lakh individuals. Now many of these people will be unemployed once the projects they are currently working on come to an end.
In a city where it is said, “It is easier to find God, than a home”, it is indeed puzzling that a move like this has been taken by the state government. This will make it even more difficult for those at the lower end of the social pyramid to be able to afford a home.
Our Prime Minister has said he aims to provide “Housing for All” by 2022. As a result there are many wonderful schemes like the Pradhan Mantri Awas Yojana which gives a government subsidy to people looking to buy their first home. But this move by the Maharashtra Government flies in the face of all these efforts. One hopes that the government realises this and rolls back this move. Else be prepared to see a big increase in prices of real estate in Mumbai in the next few years.