Housing Issues

(Urban and Rural Housing in Indian

Context)
Factors that dominate Urban housing

I. Land

II. Finance (availability of finance, affordability)

III. Concept of Density & FAR

IV. Urbanization, Gentrification and migration

I) LAND

1. The quantity of available land is fixed.

• The supply of land can only be increased by converting fringe land to
urban uses.
• Land location is also specific. Increase in demand means a competition
for land in the most suitable and accessible location.
• The result is price increases.
• Natural constraints such as mountains, gullies, and rivers all contribute in
limiting the supply of available land for use.

2. The cost-driven perspective

• Housing price consists of land acquisition cost, development cost, marketing
fee, and developer profit.
• As a component of housing cost, land price is bound to affect housing price.
• Researchers claim that housing prices rise because of a shortage in land
supply, and the rise of land price increases housing price.
3. The derived demand perspective.
• From the perspective of urban space economics, Alonso (1964) and Muth
(1960) set the bid price function, which implies that high housing demand
cause high land prices.
4. The mutual causation perspective.
• Huang (2005) and Qu (2005) found that housing price and land price have a
mutually causal relationship.
• From the demand perspective, rising housing price leads to an increase in
land price, but from the supply perspective, land price is a factor in housing
price increase.
• Housing price is not the sole determinant of land price and vice versa.
5. Urban growth boundaries:
• laws that may delimit areas of growth.
6. Areas of critical state concern:
• laws which may identify areas of environmental concern or protection.
7. The price and availability of land
• is an important issue influencing housing supply for urban families and low
income families alike.
• The price of land depends on many factors including location, distance from
services and amenities, nearness to commercial, academic, health facilities,
availability of public transport, etc.

8. Government regulations or practices contributing to a decrease in land supply:

• Urban Land ceiling act
• Rent control
• Regulations preventing or slowing down the conversion of land from one use
to another
• Master plans ignoring real estate demand
• High stamp duty
• Large institutional land holdings
• Inadequate primary infrastructure
• Very low property taxes
II) Finance
Housing finance is important during housing production because it is necessary
to have adequate finance that can enable a householder to purchase land,
building materials, labour and any other component that leads to housing
completion and maintenance.

1. Construction: continuous stream of revenue/funds

2. Affordability:
• The lack of flexible, long-term housing finance for many households
limits affordable housing supply and effective demand.
• When and where formal housing finance schemes do exist, they are
accessible only to high-income households.
• down payment requirements and interest rates are high—thus,
limiting the ability for most households to secure formal housing
finance.
3. Reducing Slum Living:
• Slum reduction may occur because of the new affordability brought
about by deepening of housing finance and an increase in housing
supply.
• As mentioned, new construction in the upper end of housing markets
allows for the movement of middle-income groups; this in turn
motivates lower-income households to avail of the lower-cost housing
units previously occupied by the middle-income groups.
4. Finance of Housing Developers:
• Many actors are engaged in the provision of housing and
infrastructure in developing countries.
• They also need access to finance over and above their individual
saving capacity (UN-Habitat 2005).
• This is important to prevent a situation in which increased access to
finance for households is not followed by an adequate supply
response with consequent increases in house prices
III) Density & FAR
Density (specifically referring to the density of urban space) has numerous
definitions and methods of measurement. Can be defined by:

1. how many people live in an area,

2. the size of buildings on a given site (floor area ratio or FAR) or

3. how many homes are in an area (dwelling unit density).

Three different quantitative measurements of density:

Dwelling units per hectare or acre, people per hectare or acre, and floor area
ratio.

It is important to look at all three numbers to obtain an accurate depiction of

density.
FAR + Coverage
Floor Area Ratio (FAR) is the ratio of built area (a building's total size)
to the lot area (the property upon which the building is built). It
is a measure used by planners, regulators, and developers to discern the
intensity of a development. By itself, however, it is not sufficient to
define density.

Coverage is the relationship between the ground floor area of

enclosed buildings and the area of the site.
Development scenarios with the same FAR but different coverage will
produce varying types of development: for example, low-rise or high-
rise.
Dwelling Units
Another measure of density is the number of dwelling units built on the lot,
often used by realtors or developers, as their focus is the marketable number
of units in a given area.

Large buildings may take up the same amount of space as small ones, resulting
in similar levels of FAR.
Population
Measuring the number of people in a given area is helpful to measure
density, however, it does not measure the amount of living space per person.
Are dwelling units a comfortable size? Is there public space for people? How
many people live in each household?
IV) Urbanization, Gentrification and migration

• Urbanization is relevant to a range of disciplines, including geography,

sociology, economics, urban planning, and public health.

• The phenomenon has been closely linked to modernization, industrialization,

and the sociological process of rationalization.

• Urbanization creates enormous social, economic and environmental changes,

which provide an opportunity for sustainability with the “potential to use
resources more efficiently, to create more sustainable land use and to protect
the biodiversity of natural ecosystems.”
Gentrification
• Defined as a process of urban enhancements by which the original
inhabitants of an area are displaced by a group of wealthier people.
• Involves the invasion by middle-class or higher-income groups of
previously working-class neighbourhoods
• Replacement or displacement of many of the original occupants.
• Involves the physical renovation or rehabilitation & upgradation of highly
deteriorated housing stock
• Housing in the areas affected, undergoes a significant price appreciation.
• Involves a degree of tenure transformation from renting to owning
• Both economic and socio-cultural transformations

There are several approaches that attempt to explain the roots and the reasons behind
the spread of gentrification. Bruce London and J. John (1984) compiled a list of five
explanations:
(1) demographic-ecological, (2) sociocultural, (3) political-economical, (4) community
networks, and (5) social movements.
The first theory, demographic-ecological, attempts to explain gentrification through
the analysis of demographics: population, social organization, environment, and
technology.

The second theory proposed by London and Palen is based on a sociocultural

explanation of gentrification. This theory argues that values, sentiments, attitudes,
ideas, beliefs, and choices should be used to explain and predict human behaviour, not
demographics, or "structural units of analysis"

The third theoretical explanation of gentrification is political-economic and is

divided into two approaches: traditional and Marxist. The traditional approach argues
that economic and political factors have led to the invasion of the inner-city, hence the
name political-economic.

The community-network approach is the fourth proposed by London and

Palen. This views the community as an "interactive social group." Two perspectives are
noted: community lost and community saved.

The fifth and final approach is social movements. This theoretical approach is
focused on the analysis of ideologically based movements, usually in terms of leader-
follower relationships.
Consequences

 Due to the confrontation and mixture of different social groups, concentrations of

poverty can be reduced and as the number of people with a high education increases,
the crime rate of the area reduces, which again leads to an improved image of the
urban district.
 As a consequence of the rise in interest in the urban district, investment and
modernisation actions redevelop old buildings and housing stocks, which on one hand
enhances the image and the atmosphere of the area (Häußermann 1990), while on
the other hand might reduce the historical character of the urban district (Lees,
Slater and Wyly 2008).
 Further, the owners of the renovated buildings, due to the increased value of the real
estate, are able to collect higher rents. The local economy is strengthened and
stimulated as well.
 Summing up, gentrification affects the development of an urban district concerning
its socio-demographic, economic and building structure. Depending on the point of
view, these consequences can be evaluated as social and economic advantages or
disadvantages.
Migration
• For a large country like India, the study of movement of population in different
parts of the country helps in understanding the dynamics of the society better.
• At this junction in the economic development, in the country, especially when
many states are undergoing faster economic development, particularly in areas,
such as, manufacturing, information technology or service sectors, data
migration profile of population has become more important.
• When a person is enumerated in census at a different place than his / her place
of birth, she / he is considered a migrant.
• It also happens that many return to their place of birth after staying out. To
capture such movements of population census collect information on migration
by last helps to understand the current migration scenario better.
Problems of Rural Housing
 Drivers and constraints to rural housing development
• Scale and character
• Dispersed settlements, poor connectivity,
small volumes per village, not aggregated
for the purpose of housing

• Low and unstable income streams, often

migrate for short or long periods

• Large gap – large need, demand is

underlying.

• Wary of long term and large loans

• Inadequate securities, guarantors, land

titles, and bank connectivity
 Drivers and constraints to rural housing development

• Physical infrastructure in the village – water, electricity and

sanitation

• Dwelling Unit level- Planning, Structure, Climate, Hygiene

• Village level
Organic growth, Narrow streets, Irregular plots,
Lack of community facilities,

• SOCIAL - Education, Interdependencies among individuals

 Drivers and constraints to rural housing development

• ECONOMICAL
Lack of government help and subsidies, lack of marketing
facilities of the products
Availability of land for housing

• Housing finance
• Access to building materials, building technology, and
skilled construction labour
• Legal, regulatory and institutional issues
 Drivers and constraints to rural housing development

Land regulations and availability of land

Major problem faced by a potential beneficiary was control over

land which is essential for availing government financial assistance.

E.g. Minimum level of land ownership for IAY eligibility

In a village called Goitrout Pane in Sadar block of Orissa’s Cuttack
district, a BPL family was denied access to IAY subsidy because it did
not have 120 sq. feet, the minimum eligibility for IAY subsidy.

Existing social housing schemes are concerned only with house

construction, not with land.
Physical infrastructure including amenities like
water, electricity and toilets
Little attempt at integrating rural housing programmes with
other existing schemes for providing drainage, drinking
water, internal roads and electricity.

Absence of proper planning and development authorities in the rural

areas
 Key constraints in financing
• Land and identity
• Large proportion of households is landless
• Village lands are generally fully used up for housing
• Buying land implies higher cost of housing
• Market for house sites is poorly developed and non-
agricultural land titles are difficult to establish –
paperwork for KYC norms and NOCs are time consuming
• Materials and Technology
• The alternative technologies or building materials have
not reached rural India
• Feasibility of prefabricated products and/or low cost
alternative materials for construction yet to be fully
explored
• Skills and Information
• Formally trained masons, carpenters, electricians or plumbers are not available in rural areas. This leads
to inefficient use of resources and may also lead to unsafe houses.
• Building contractors appropriate for rural areas yet to appear in large numbers

• Financing
• Irregularity of incomes / inadequate information on credit history
• Land Title issues
• Housing loans are long term and large – non productive
• High interest of mfi loans, low servicing of hfcs and banks