Affordable housing in India continues to languish because of pandemic-induced demand changes and several other factors. Both supply and demand in the affordable housing segment is shrinking, a latest survey by Anarock data said. Among the top seven cities, MMR and Pune saw the maximum affordable housing sales with 37 per cent (17,470 units) and 21 per cent (about 9,700 units) shares, respectively.
NCR was close behind with about 8,680 affordable homes sold in H1 2023, comprising a 19 per cent share of all affordable homes sold in the top 7 cities in H1 2023. Around 720 units, Hyderabad saw the least number of affordable homes sold in H1 2023, a minuscule 2 per cent share of the total affordable housing sales in the top 7 cities.
Anuj Puri, chairman, Anarock Group, said, “The total sales share of this erstwhile poster-boy segment is down to about 20 per cent in H1 2023, against 31 per cent in the corresponding period in 2022. Of 2.29 lakh units sold across the top 7 cities in H1 2023, just 20 per cent or 46,650 units were affordable homes. Back in H1 2022, of nearly 1.84 lakh units sold, over 31 per cent or almost 57,060 units were in the affordable category.”
Lack of sound support infrastructure in the distant suburbs and the conspicuous absence of contemporary low-cost construction techniques are posing additional challenges for this segment. “It isn’t just that the pandemic derailed the growth of this once highly-hyped segment – other factors posed challenges to both buyers and developers of this category,” said Puri.
“For instance, with land deals soaring across the country, the cost of this basic input for all real estate has spiralled in tandem. It is becoming increasingly unviable for developers to buy land at higher prices to build low-margin mass housing. Other input costs have also risen inexorably in the last few years. Launching affordable housing projects has become singularly unattractive, especially since the monetisation potential of low-budget homes has also reduced due to shrinking demand for them,” he added.
As for affordable homebuyers, a majority are seen postponing purchase decisions due to rising real estate prices over the last one year. The lower demand also reflects in the new supply of affordable housing as developers have turned their focus on mid-range, premium and luxury projects which are in significantly higher demand.
Anarock data showed that the total new supply share in the affordable category across the top 7 cities has declined from 23 per cent in H1 2022 to 18 per cent in H1 2023. Of 2,12,180 units launched in H1 2023, just 39,220 were in the affordable housing category. In H1 2022, of 1,71,290 units launched, approx. 38,820 were in this category.
In terms of new supply across the top 7 cities, MMR, Pune, and NCR saw the maximum new affordable housing supply in H1 2023, collectively accounting for 87 per cent of all affordable supply share.