Question

Which of the following is/are supply side intervention(s) to improve housing affordability?

• A. Increase in availability of urban land for housing
• B. Increase in Institutional Housing Finance
• C. Reduction in Floor Area Ratio
• D. Increase in Stamp Duty

Hint:

Supply-side interventions focus on increasing the availability of land and finance to make housing more affordable. Demand-side measures, like increasing stamp duty, often have the opposite effect.

Answer 1

The Correct Option is A, B

Supply-side housing interventions aim to enhance housing availability and affordability by improving the production and supply of housing resources.

Step 1: Augmenting urban land availability for housing constitutes a supply-side intervention. Increased land availability facilitates greater housing development, potentially leading to reduced prices and enhanced affordability.

Step 2: An increase in Institutional Housing Finance is also pivotal for improving housing affordability. By bolstering financial support for housing development via institutions, more projects can be funded, resulting in increased supply and improved affordability.

Step 3: A reduction in Floor Area Ratio generally does not enhance housing affordability. Conversely, a decreased Floor Area Ratio (FAR) can restrict the usable space within a building, potentially escalating costs and limiting the number of units developable on a given land parcel.

Step 4: An increase in Stamp Duty is a demand-side intervention, not a supply-side one. Elevated stamp duty increases property acquisition costs, thereby diminishing housing affordability rather than improving it.

Consequently, the appropriate responses are (A) Increase in availability of urban land for housing and (B) Increase in Institutional Housing Finance.