The problem is well defined and researched by Mr.Rybcznski.It is true that the unaffordability of a house, specifically in metropolitan cities in India is due to high cost of serviced land. Even this cost is not the real cost of servicing the land but the "speculative opportunity cost" of serviced land. The present per square foot prices of apartments in Mumbai for example range between Rs. 65,000(approx. 1413 US $)at Colaba-southern most tip of the island city- to Rs.1400(approx.30.40 US$) at Vasai the northern suburb a variation of almost4648%! Not surprisingly the cost of construction at the two locations for similar specifications varies by hardly 50%. The key to affordable housing is therefore the availability of serviced land at affordable prices rather than the construction cost.The Government has addressed the issue by
1 Reducing the size of a house to as low as 225 sq. ft. of carpet area.
2 By making such houses available to the lowest income groups at cost of construction.
The result is that the occupants, despite various legal constraints, manage to sell the apartment at the market rate earning a profit of anything up to 2000%!
So long as the opportunity cost of land in cities like Mumbai is much higher than the real cost the so called affordable housing will ultimately be taken up by the rich.
A possible remedy lies in not reducing the cost of construction or size of a residential unit but reducing the opportunity cost of serviced land by making the metropolitan cities less "attractive' for the speculators. Rather than architectural or engineering solutions an urban planning and strategy has to be devised to make affordable housing a reality.

Prakash M Apte
10/20/2008