New supply of affordable homes priced up to ₹60 lakh each, declined 38 per cent, across eight major cities to 33,420 units, during January-March this year, with builders focusing on developing luxury flats, according to PropEquity.
Real estate data analytic firm PropEquity, attributed the fall in new supply to sharp rise in land and construction costs, which has made development of affordable housing projects, less profitable or unviable.
According to PropEquity data, the fresh supply of homes, up to ₹60 lakh each, stood at 33,420 units, during January-March 2024 across top eight cities, as 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.
PropEquity data showed that the new supply in this price category fell 20 per cent, during the 2023 calendar year and the declining trend continued in the first quarter of this year as well.
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“The number of affordable housing units launched in the top eight cities of the country has seen a significant decline. In 2023, only 1,79,103 units priced under ₹60 lakh were launched, a drop of 20 per cent compared to 2022, wherein 2,24,141 units were launched,” Samir Jasuja, CEO and MD of PropEquity, said.
This trend is expected to continue in 2024, he added.
“Several factors are contributing to this decline. Rising real estate prices (up to 50-100 per cent in some cities over the past two years), and increasing construction costs, are making affordable housing projects less profitable for developers,” Jasuja said.
Additionally, he said, the post-pandemic demand for larger homes, is pushing developers towards mid-range and luxury segments, which offer higher margins.
Concerned over the trend, Nitin Gupta, Secretary, CREDAI NCR, Bhiwadi-Neemrana, said prioritising 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,” he said.
Gupta, however, said developers in many tier II and III cities, including Bhiwadi, are launching affordable housing projects.
According to PropEquity data, the new supply of homes priced up to ₹60 lakh, declined in MMR to 15,202 units during January-March, from 22,642 units in the year-ago period.
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In Pune, the supply plunged to 6,836 units, from 12,538 units.
New supply in Ahmedabad fell to 5,504 units, from 5,971 units.
Hyderabad saw a decline to 2,116 units, from 2,319 units, while Chennai witnessed a fall to 501 units, from 3,862 units.
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.
However, new supply of homes up to ₹60 lakh increased in Delhi-NCR to 400 units in January-March this year, from 38 units in the year-ago period.
Jasuja also stressed on the need to change affordable housing definition.
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“As the prices of properties have gone up across cities, properties up to ₹60 lakh and/or units having 60 square meter area, should be termed as affordable units”.
PE Analytics Ltd, which is listed on the stock exchange, and runs PropEquity platform, reported a 37 per cent growth in total income to ₹44.17 crore last fiscal, from ₹32.3 crore in 2022-23.
PropEquity is an online provider of analytics, data, and deal flows covering the Indian real estate industry. The company tracks over 1,73,000 projects of 57,500 developers across 44 cities in India on a real time basis. Its search platform, generates analysis for all verticals under residential, commercial and retail sectors.