Housing is key for well-being and for spatial and social mobility. In India, the housing market is characterised by excess demand for affordable dwellings, a small rental market and an oversupply of high-end housing, especially in urban areas. The housing shortage among low-income groups is large, despite increases in the stock of quality housing in recent years, as house prices are high relative to incomes and access to credit is often difficult. Prices are high because of structural rigidities in the market, stemming from stringent zoning and land regulations, restrictive floor indices and high transaction costs, in the context of high population density. Ongoing urbanisation, and particularly rural-urban migration, will intensify demand for affordable housing, especially at the low end of the market.

Improving the functioning of the housing market calls for clarifying property rights and easing rent control and zoning rules. Lowering transaction taxes, especially stamp duties, would support mobility. Simplifying land use regulations and enhancing contract enforcement would also boost housing supply. The 2016 Real Estate (Regulation and Development) Act, which seeks to enhance transparency, protect the interests of homebuyers and boost investment in the real estate sector, helped improve the market situation. By improving the collateral security, the law can also facilitate access to housing finance. The Housing for All programme that aims to provide a home for every Indian by 2022 is a good way forward in reducing the shortage. Like many past government programmes, it promotes ownership. More is needed to develop rental housing and to address the needs of vulnerable groups. The 2019 Model Tenancy Act is a step in the right direction.