Rising inflation and overall price increase of raw materials and services are pushing property rates north in key markets, making affordable homes unaffordable.
Following a series of stimulus packages and the economic revival, developers have jacked up property prices by 10 to 35 per cent in the last few months.
“We have increased prices from Rs 3,999 to Rs 4,930 per sq ft but it is still 25 to 30 per cent cheaper than other properties available in Goregaon and Mumbai,” said Dilawar Nensey, joint managing director, Royal Palms India.
Developers across India had launched around 300,000 affordable homes 15 to 18 months ago to tide over the glut in the property market and mop up resources to pay back debt. However, only a handful are being implemented, say experts.
“Launching affordable housing was a gimmick to show high sales. No delivery has started so far. Even work has not started in most projects,” said Pankaj Kapoor, CEO, Liases Foras, a property research form that tracks projects and prices.
There are several instances of already launched projects remaining stalled due to lack of approvals, thus leaving buyers in the lurch. Tata Housing’s project at Boisar, 120 km away from Mumbai, is likely to be the first to be handed over to buyers later this year.
“Developers are launching projects in far-flung areas, selling them at prevailing rates in that area and calling them “affordable”. Ideally, an affordable house should be a no-frills one but be priced about 20 per cent to 40 per cent less than the prevailing rates,” said Nensey.
According to Samir Jasuja, CEO, Prop Equity, National Capital Region and Delhi markets have not seen prices rise like Mumbai, and is fast moving towards the luxury segment. “Luxury homes are back in demand. Execution of affordable homes will be the main challenge,” he said.
Location is another problem. Lack of infrastructure and increased transportation costs makes the cheap home unviable, if the commute to work is 100 kms.
“Only a superman can afford to stay in an affordable home... and zip to office through the air!” said Kapoor of Laises Foras.