The Mumbai Metropolitan Region (MMR) and Pune recorded the maximum sales of affordable homes although the total sales share of the affordable home segment in the top seven Indian cities is down to about 20% in the first six months (H1) of 2023. This is against the 31% in the corresponding period in 2022. Of the around 2.29 lakh units sold across the top 7 cities in H1 2023, just 20% or approximately 46,650 units were affordable homes, according to a report released by ANAROCK.
In H1 2022, of the 1.84 lakh units sold, over 31% or 57,060 units were in the affordable category. “Among the top seven cities, MMR and Pune saw the maximum affordable housing sales with 37% (17,470 units) and 21% (9,700 units) shares, respectively. NCR was close behind with about 8,680 affordable homes sold in H1 2023, comprising a 19% share of all affordable homes sold in the top 7 cities in H1 2023,’’ said the ANAROCK report.
At about 720 units, Hyderabad saw the least number of affordable homes sold in H1 2023 - a minuscule 2% share of the total affordable housing sales in the top 7 cities. “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 ANAROCK Group chairman, Anuj 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 monetization potential of low-budget homes has also reduced due to shrinking demand for them,” he said.
The lack of sound support infrastructure in the distant suburbs and the conspicuous absence of contemporary low-cost construction techniques are additional challenges for this segment. As for affordable housing buyers, 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,’’ said the report.
The report further indicates that the total new supply share in the affordable category across the top seven cities has declined from 23% in H1 2022 to 18% in H1 2023. Of the roughly 2,12,180 units launched in H1 2023, just 39,220 were in the affordable housing category. In H1 2022, of the 1,71,290 units launched, approx. 38,820 were in this category. In terms of new supply across the top seven cities, MMR, Pune and NCR saw the maximum new affordable housing supply in H1 2023, collectively accounting for 87% of all affordable supply share.
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