Summary of this article
SBI seeks affordable housing definition revision
Average home loan size rises sharply
Metro housing prices outpace current affordability cap
Property prices have been increasing all across India, for which a majority of the homebuyers are reliant on loans and housing finance companies. Recognising this, the largest lender of India, The State Bank of India, has sought a revision in the definition of affordable housing. The bank has revealed to PTI that the current benchmark is not reflecting the market realities, especially in the metro and urban areas, where home prices and loan requirements have increased significantly.
SBI Chairman C S Setty has stated that the government should revise the criteria for the existing affordable housing segment. This also points to the sharp rise in the average loan ticket size that buyers are seeking. As per the bank, the average home loan size, which is sanctioned, has grown to Rs 51 lakh, as compared to Rs 35 to Rs 40 lakh in just two years.
Currently, homes that are priced up to Rs 45 lakh are qualified under the affordable housing segment as per the government guidelines. Such projects and loans get multiple benefits, such as priority sector lending status for banks, low-interest incentives and tax benefits for buyers and developers. Here, SBI argues that inflation in construction costs, land prices, and overall housing demand makes these demands outdated.
A similar statement has been made by the CREDAI President, Shekhar Patel, in a conversation with Outlook Money, “Due to inflation, a home that cost Rs 45 lakh in 2017-18 now costs around Rs 80 lakh. If affordable housing is defined by unit size (up to 90 square metres), rather than an outdated price cap, the segment is not shrinking. There is significant supply and demand for such units, particularly in Tier 2 and Tier 3 cities, though prices are now typically Rs 70 lakh to Rs 90 lakh.”
Recognising the demand for revision comes at a time when residential real estate prices have risen steadily across key cities in India. Markets such as Mumbai, Bengaluru, Delhi and Hyderabad have witnessed a strong appreciation in market values. This is driven by infrastructure expansion, rising input costs, and a continuous demand for housing. In many urban locations, buyers find it hard to purchase mid-sized homes within the same affordable housing cap.
This recommendation by SBI highlights the changing aspirations of homebuyers. Ever since the pandemic, buyers have sought larger homes, improved in-house amenities, and improved connectivity, as these were some priorities realised during this time. Alongside, the loan prices have also increased, which pushes many middle-income buyers outside of the affordable housing criteria.
