Niti Ayog recommends increasing the price cap to INR 60 lakh for 60-sqm homes in metros and INR 45 lakh for 90-sqm units in non-metros.
February 10, 2026: Redefining affordable housing is one of the crucial steps to scale supply in this segment, says a recent report by NITI Aayog.
In the report titled ‘A Comprehensive Framework to Promote Affordable Housing’, the government think-tank points out that within state-run agencies, the presence of varied definitions of affordable housing could be one of the reasons hampering the growth of this housing segment.
Under the government’s flagship Pradhan Mantri Awas Yojana 2015, affordable homes are those with a carpet area of up to 60 square metre in metropolitan cities with a total value not exceeding INR 45 lakh. On the other hand, the Reserve Bank of India has a population-centric definition to assess eligibility for borrowers to qualify for loans under the affordable housing category. For instance, in areas with a population of over 50 lakh people, housing loans of up to INR 50 lakh would make the cut, provided the property value does not exceed INR 63 lakh.
The report recommends revising the definition to increase the price cap for affordable housing at INR 60 lakh for 60-sqm homes in metropolitan areas and INR 45 lakh for 90-sqm units in non-metropolitan areas.
Additionally, it also recommends that housing projects in which at least 50% of the permissible floor area ratio is dedicated to affordable units must qualify as affordable projects to receive state-sponsored incentives.
While stating that the demand in this segment is unlikely to be met by market forces, the report highlights that policy interventions are necessary to promote and enable affordable housing for the world’s most populous country. Calling attention to the deficit in this segment, the report estimated supply at 2–3 crore quality affordable homes in Indian metros, while demand stands at 5 crore.
Growth of affordable housing remains central to India meeting its housing-for-all dream amid a record-breaking appreciation in property values in prime residential markets in the past decade.
However, the share of affordable housing in overall sales and supply has progressively depreciated in the past five years as India’s growing Middle Class looks for upgrades amid a spike in its income-generating capacity.
The report also highlights the fact that income growth has not been able to keep pace with the rise in property prices, forcing millions of people to opt for expensive renting.
The report specified that ‘average monthly household income in rural areas is about INR 20,000, compared to INR 47,000 in metros, an increase of roughly 135%. This increment is far lower than the 300-400% jump in housing costs across the same spectrum’.
A recent report by property brokerage firm Square Yards also corroborates the fact. According to the report titled From Aspiration to Reality: The Cost of Owning a 3BHK in India, the average cost of a new 3BHK across India’s top five metropolitan cities has risen to about Rs 2.7 crore. And, it would require an annual income of roughly Rs 23 lakh for 12 years to afford such a home.
