Less than one-third of the close to 1.40 lakh housing units launched across the top seven markets in the country during H1 2019 calendar year (CY) meet the government criteria for affordable housing, which mandates that a flat should be priced at or less than Rs 45 lakh and the carpet should not exceed 60 sq mt or around 850 sq ft built-up area.
As per the latest numbers from Anarock, around 1,39,490 units were launched across top seven cities during January-June 2019, and of this, only 39,840 units meet the affordable category criteria. While the Mumbai metropolitan region (MMR) witnessed the maximum launches of 17,700 units in H1 2019, followed by Pune with 9,350 units, the cities of Bangalore, Chennai, Hyderabad and Kolkata together accounted for 15% share, or around 5,820 units of the total affordable supply. Delhi NCR saw launch of 6,970 units in this category.
As of June 2019, there are nearly 2.40 lakh unsold units across the top seven cities, which, as per the market, comes under affordable category. However, a major part of this inventory falls outside the government’s ‘affordable’ definition. This unsold stock rose nearly 3% against the corresponding period in 2018. The real estate consultancy pointed out that very few people will benefit from the government’s recent budget announcement of an additional Rs 1.5 lakh tax deduction on interest repayment of home loans availed till March 2020.
Anarock chairman Anuj Puri said there is a shortage of 19 million units in urban India, and of this almost 96% pertains to the economically weaker section (EWS) and lower income group (LIG) categories, which is also the target of the government’s affordable housing push.
Puri explained that unlike earlier, developers are quite keen on affordable housing, despite the lower profit margins as compared to the luxury or ultra-luxury segments. However, they are facing problems like high land prices in the municipal limits of major cities (where urban affordable housing is most needed), which makes it unfeasible for developers to launch such projects. Another major issue impacting this market is the lack of basic infrastructure in peripheral areas, which reduces buyer interest and impacts supply.
Despite high demand for affordable houses across Delhi NCR, Mumbai and Bangalore, launch of new affordable housing units witnessed a steep 20% drop quarter-on-quarter (Q-oQ) in Q2 2019CY. New supply fell to 25,580 units compared to 32,060 units in Q1 2019.
“The government must seriously consider revising the pricing of homes that fall within the affordable housing price band, city-wise. While the prescribed unit size of 60 sq m carpet area is fairly appropriate, the prescribed pricing restrictions are not viable across most cities except in the far-flung peripheries which lack liveability and accessibility,” Puri suggested.
Overall, a total of 15.3 lakh units have been launched across top seven cities between 2014-2018, of which affordable housing was about 6 lakh units.
