Cities are building more houses than ever, but they are priced out of reach for the poor.

India's shift from rural to urban has been underway for decades. Between 1991 and 2011, the urban population jumped from about 217 million to more than 377 million, and it's expected to climb to 500 million people by 2050. Unfortunately, housing has not kept up with growth.

India's cities are suffering an 18 million household shortage, according to a new report [PDF] from the Indian government's Ministry of Housing and Urban Poverty Alleviation. Silver lining? This is better than the last time this report was conducted, in 2007, when there was a reported shortage of nearly 25 million urban homes.

It's not for a lack of housing. Homes are being built in India, but they're not meeting the needs of the entire market. The report suggests that most of the homes being built are priced for people in the upper and middle class.

According to the report, more than 56 percent of the need for housing is in the "economically weaker section" of the population. That amounts to a shortage of about 10.55 million houses for a population that lives on about $90 a month. Those in the next socioeconomic step up – those surviving on less than $200 a month – are underserved by about 7.5 million homes.

And more than 14.8 million of the households requiring new homes needs them because their current living situation is overcrowded. Many have multiple generations living in 300 square feet or less.

Filling this gap will be a challenge, but the report has some ideas for addressing this problem before it gets worse. It proposes:

  • Formally including housing in the infrastructure sector to enable more systematic development and subsidizing of new units.
  • Bringing currently vacant homes into the market through tax incentives.
  • Easing the process by which people add new space to overly crowded homes.
  • Shifting people from housing older than 80 years into modernized housing.

Top image: Residential apartments in Gurgaon, on the outskirts of New Delhi. Credit: Parivartan Sharma / Reuters

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