The new supply of affordable housing – priced up to Rs 60 lakh each – fell by 38 per cent in eight major cities. (File image)
New supply of affordable housing – priced up to Rs 60 lakh each – fell by 38 per cent to 33,420 units in eight major cities in January-March this year, with builders focusing on developing luxury apartments, according to PropEquity.
Real estate data analytics firm PropEquity attributed the drop in new supply to the sharp increase in land and construction costs, which has made the development of affordable housing projects less profitable or unviable.
According to PropEquity data, new housing supply, up to Rs 60 lakh each, stood at 33,420 units in the top eight cities between January and March 2024, against 53,818 units in the year-ago period.
These eight cities are: Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Chennai, Kolkata, Pune and Ahmedabad.
Data from PropEquity showed that new supply in this price category fell by 20 percent in the calendar year 2023, and the downward trend continued in the first quarter of this year.
“The number of affordable housing units launched in the country’s eight largest cities has fallen significantly. In 2023, only 179,103 units were launched priced under Rs 60 lakh, a decline of 20 percent compared to 2022, when 224,141 units were sold. launched,” said Samir Jasuja, CEO and MD of PropEquity.
This trend is expected to continue into 2024, he added.
“Several factors are contributing to this decline. Rising real estate prices (up to 50-100 percent in some cities in the past two years) and rising construction costs are making affordable housing projects less profitable for developers,” Jasuja said.
Additionally, he said, post-pandemic demand for larger homes is pushing developers into the mid-range and luxury segments, which offer higher margins.
Concerned about the trend, Nitin Gupta, Secretary, CREDAI NCR, Bhiwadi-Neerana, said prioritizing affordable housing is essential to make the dream of home ownership achievable for people on lower and middle incomes.
“Unfortunately, major NCR cities like Noida, Gurgaon and Delhi currently have insufficient supply of these properties,” he said.
However, Gupta said developers are launching affordable housing projects in many tier II and III cities, including Bhiwadi.
According to PropEquity data, new supply of housing priced up to Rs 60 lakh in MMR fell to 15,202 units in the January-March period, compared to 22,642 units in the year-ago period.
In Pune, supply fell from 12,538 to 6,836 units.
New supply in Ahmedabad fell from 5,971 to 5,504 units.
Hyderabad saw a decline of 2,319 units to 2,116 units, while Chennai witnessed a decline of 3,862 units to 501 units.
New supply in Bengaluru fell from 3,701 to 657 units. In Calcutta, new supply fell from 2,747 units to 2,204 units.
However, new supply of housing up to Rs 60 lakh has increased in Delhi-NCR to 400 units in January-March this year, compared to 38 units in the year-ago period.
Jasuja also emphasized the need to change the definition of affordable housing.
“As real estate prices have increased in cities, properties up to Rs 60 lakh and/or units measuring 60 square feet in area should be considered as affordable units.”
PE Analytics Ltd, which is publicly listed and runs the PropEquity platform, reported a 37 per cent growth in total income to Rs 44.17 crore in the last financial year, compared to Rs 32.3 crore in 2022-23.
PropEquity is an online provider of analytics, data and deal flow for the Indian real estate sector. The company tracks over 1,73,000 projects from 57,500 developers across 44 cities in India in real-time. The search platform generates analyzes for all industries in the residential, commercial and retail sectors.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)
First print: May 26, 2024 | 12:37 pm IST