Top 8 cities in India witnesses 38% decline of affordable houses in Jan-March

The supply of modern affordable home, which are priced 60 lakh each, is sharply declining by 38% in the eight major metro cities of India to 33,420 units during January-March this year, with builders focusing on developing luxury flats.

According to real estate data analytic firm PropEquity  mentioned that, the prime reason of this sharp decline is sharp rise in land and construction costs. For this, the development of affordable housing projects is becoming less profitable or unviable. 

According to analysis of PropEquity, the fresh supply of homes, up to Rs. 60 lakh each, stood at 33,420 units during January-March 2024 across top eight cities, which was  53,818 units in the year-ago period. These eight major cities are, Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Chennai, Kolkata, Pune and Ahmedabad. Data shows that, the new supply in this price category fell 20% during the 2023 calendar year and the declining trend continued in the first quarter of this year as well.

The CEO and MD of PropEquity, Samir Jasuja said, "The number of affordable housing units launched in the top eight cities of the country has seen a significant decline. In 2023, only 179,103 units priced under Rs 60 lakh were launched, a drop of 20 per cent compared to 2022, wherein 224,141 units were launched."

He is of opinion that, the trend will continue throughout FY24. He also added that, several factors are contributing to this decline. Rising real estate prices, has increased 50-100% in some cities, construction costs are also has increased which is making the affordable homes less profitable for the developers.  One of the most vital driving factor is the post-pandemic demand for larger homes, which is pushing developers towards mid-range and luxury segments, which offer higher margins.

The secretary, CREDAI NCR, Bhiwadi- Neemrana, Nitin Gupta, said that, “Prioritizing affordable homes is essential to make the dream of homeownership attainable for lower and middle-income individuals. Unfortunately, major NCR cities like Noida, Gurgaon, and Delhi currently lack sufficient supply of these homes."

Acording to PropEquity data, new supply in Bengaluru decreased to 657 units from 3,701 units. In Kolkata, the new supply declined to 2,204 units, from 2,747 units.

Jasuja also said, “As the prices of properties have gone up across cities, properties up to Rs.60 lakh and/or units having 60 square meter area should be termed as affordable units.”