SWAMIH 2.0: Why India’s Booming Housing Market Still Needs Govt Support

Indian property developers had another strong year in 2024, as robust housing demand drove record-high sales and new luxury project launches in many top-tier cities.

At the same time, the number of stalled housing units in 44 Indian cities rose to over 5 lakh, according to data released by NSE-listed analytics firm PropEquity. Uttar Pradesh’s Greater Noida recorded the highest number of unfinished housing units (76,256), followed by Thane and Gurugram, the data shows.

The second installment of the Central government's Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, announced in Budget 2025, aims to help complete 1 lakh of these stalled units.

How SWAMIH Fund Helped Homebuyers

The first SWAMIH Fund was launched in 2019 and dubbed "last-mile financing" as lakhs of unfinished housing units languished across India, leaving thousands of buyers in distress. The fund was set up by the Central government and is managed by SBI Ventures.

A study by PropEquity, commissioned by SBI Ventures Ltd in 2019, estimated that about 1,500 stalled projects, comprising 4.58 lakh units, would require aggregate funding of Rs 55,000 crore for completion.

So far, the SWAMIH Fund, with a capital commitment of Rs 15,530 crore, has helped complete over 50,000 homes and aims to deliver 60,000 more in the next three years.

However, a PropEquity report published in August 2024 stated that nearly 2,000 housing projects across 42 cities, comprising 5.08 lakh units, remain stalled. This includes 1,636 projects with a total of 4,31,946 units in 14 tier-I cities and 345 projects with 76,256 units in 28 tier-II cities.

On 1 February, Finance Minister Nirmala Sitharaman announced in her Budget speech that SWAMIH Fund 2 will be established as a blended finance facility with Rs 15,000 crore to expedite the completion of another 1 lakh units.

Samir Jasuja, Founder and CEO of PropEquity, described SWAMIH 2.0 as a "small yet welcome" move by the government.

Why Govt Brought SWAMIH 2.0

The second SWAMIH fund comes against the backdrop of a booming housing market in India, where sales in the top eight cities rose 7% year-on-year in 2024, reaching a 12-year high. Demand for premium homes has surged, prompting developers to increase launches of Rs 1 crore and above properties fivefold compared to 2019, according to Knight Frank India.

"While market conditions are favourable, they mostly benefit new launches and projects backed by reliable developers with a clear path to completion. However, stalled projects are still languishing," said Gulam Zia, Executive Director at Knight Frank India, adding that the original objective of SWAMIH remains only partially fulfilled.

"When we talk about distress, it’s not just about projects that have been completely shut for years—many are now reaching that stage. While the market is performing well overall, there are still locations and projects that are struggling to sell," he added.

Suffering Homebuyers

Finance Minister Nirmala Sitharaman, in her Budget speech, noted that SWAMIH has supported and will continue to support "middle-class families who are paying EMIs on loans taken for apartments while also paying rent for their current dwellings."

Following liberalisation and other reforms, India's tier-1 cities saw a wave of real estate investment in the early 2000s, driven by rising salaries, low interest rates, and banking sector expansion. However, the 2008 financial crisis in the US served as a wake-up call, as excessive debt had built up across stakeholders—developers hoarding expensive land, small investors stretching loans, and banks and institutional investors heavily exposed.

"Somewhere around 2012, things started falling apart in the Delhi market. In fact, the first to be hit immediately after the 2007-08 financial crisis was Delhi and other northern markets, where sales came to a grinding halt," said Knight Frank India's Gulam Zia. He added that the worst-hit areas included Noida, Greater Noida, and Ghaziabad.

A 2023 report on legacy stalled real estate projects, led by G20 Sherpa Amitabh Kant, noted that about Rs 4.08 lakh crore worth of investments were stuck in delayed projects at the time. Meanwhile, many developers have declared bankruptcy or have been penalised for failing to deliver homes on time.

One such action was taken by the Noida Authorities against Shubhkamna BuildTech and IVR Prime Developers just days before Budget 2025. A complaint was filed against them with Delhi's Economic Offences Wing for allegedly misappropriating funds collected from apartment sales.

Shubhkamna BuildTech had promised to construct 692 flats in Sector 137 under the "Shubhkamna Tech Homes" project. However, more than 15 years later, not a single unit has been delivered. IVR Prime Developers were allotted 1.3 lakh sqm of land in 2007 for the Ajnara Ambrosia project in Sector 118. While 4,065 flats were sanctioned, only 3,385 units have been built, none of which have been registered.

"In the first phase, several projects stuck in NCLT or those where loan takeovers from financial institutions were not feasible were not addressed. If SWAMIH 2.0, in its revised form, can resolve these challenges, it will significantly aid stalled projects in reaching completion," said Ameya Tandulkar, COO of Paradigm Realty.

Developers Cheer FM Sitharaman

Meanwhile, developers are applauding the finance minister for easing the Centre’s purse strings for homeowners in Budget 2025.

"The launch of SWAMIH 2.0 is a significant development, particularly as the affordable housing segment has underperformed in recent quarters due to stressed projects. In contrast, premium and luxury housing sales have maintained steady growth," said Sunil Pareek, Executive Director of Bengaluru-based Assetz Property Group. He added that the fund will provide a much-needed boost to the affordable and mid-income housing sector.

According to Angad Bedi, Chairman and Managing Director of BCD Group, the decline in affordable housing sales began with shrinking disposable incomes, rising circle rates, the discontinuation of interest subsidies under Pradhan Mantri Awas Yojana, and increasing input costs.

He noted that SWAMIH 2.0 will help clear unsold inventory through a balanced approach of debt financing for developers and interest subvention schemes for homebuyers.