Page 74 - HUDCO-SHELTER-APR21

POLICY REVIEW

Beyond a simple definition, difference between housing being able to afford to buy or
however, it is important to affordability and affordable rent a house, but also being able
underline that housing housing. The essential difference to afford to live in it. It involves
affordability is a complex ma er in the comparison of affordable meeting expenses related to
that is related to various other housing and housing operations and maintenance
issues such as affordable living, affordability lies in the fact that considerations of transport,
affordable standards, and affordable housing addresses the infrastructure and services etc. If
affordable rents in social problem from the point of view a house is cheap enough to buy
housing, and it presents policy of the supply, whereas housing and run, but located far from
implications, empirical analysis, affordability addresses it from livelihood opportunities or
norms, and standards; further, it that of the demand. amenities such as schools, it
is appropriate to clarify the Affordability is not only about cannot be said to be affordable.

Basic Components of Financial Affordability of Housing include:

Cost to Buy the house Cost to keep the house
• House purchase price: House price is • House occupation cost: Land lease,
determined by cost of land, home insurance, property tax, quit rent
infrastructure, building materials, labour and building maintenance costs.
and profit. • Ability to financially service loans :
• Ability to finance down payment: Interest rates and loan tenure, income
Affected by down payment requirements, and non-housing expenditure.
available savings, existing debt and loan
amounts.

DEMAND STRUCTURING There are several types of financial development of
FOR AFFORDABLE HOUSING affordable housing the existing housing
To understand how many of demands.Broadly, the demands market. The regulatory
households in need of a can be categorized as following measures can include the
dwelling can afford for availing types (Figure 4): security of tenure to the
housing, the demand shall be a. Real demand: In such buyer; the building
structured. That is, the demand demands, the buyers need standards in terms of
shall be fragmented into no financial assistance to quality of construction; and
segments in such a way that the purchase a house as they building materials used.
capacity of the population can be can afford their desired The regulation in the
assessed. Such type of dwelling units. However, interest rates may be
structuring can be vital for the market has to be established for the security
achieving success in the delivery structured for the security of the borrower.
of affordable housing to the of the buyers by se ing up b. Potential demand: The
residents of the metropolises. regulatory measures for potential demand is when

72 HUDCO-HSMI Publication