Affordable housing market fails to take off, says report
Despite the Central government offering sops to promote the affordable housing segment, the supply of such houses has not increased and only about 29% of the total 1.39 lakh units launched across the top seven cities in India in the first six months of 2019 are affordable, states a report released by real estate consultancy Anarock on Monday.
Out of the total supply of 1,39,490 units across the top seven cities in the country, only 39,840 units fall in the affordable category. High cost of land, the rising price of inputs and the lack of interest of buyers in peripheral areas are some of the possible reasons for the slower growth in this segment, the report states.
To avail credit subsidy and tax deduction on interest payment of loans announced by the government in the interim budget in February this year, a house must be priced at less than ₹45 lakh and not exceed 60 square metres or 850 square feet, including overall loading. These are the basic criteria for a house to be classified as affordable.
As per the report, the Mumbai Metropolitan Region (MMR) witnessed the maximum launches in the affordable category with 17,700 units, while Pune came second with 9,350 units. The National Capital Region (NCR) saw the third highest number of launches of affordable units at 6,950 units between January and June this year.
Major cities, including Bangalore, Chennai, Hyderabad and Kolkata, together accounted for a mere 15% of the share and saw 5,820 new units in this category.
Anuj Puri, chairman, Anarock Consultants, said that though developers are keen on affordable housing, high input costs and land prices are proving to be a barrier for affordable housing. “There is scarcity of land and in the peripheral areas, the infrastructure is lacking that discourages buyers and curtails supply,” Puri said, adding that price definition of affordable housing in top cities needs to be revised.
The report further states that if the price restriction is widened, more homes will come within the ambit of affordable housing and thus help aspiring buyers to take benefits such as lower GST rates, government subsidies and tax deductions. It also called for the government to release the land held by public sector units such as railways, heavy industries and other such organisations to increase the supply.
The realtors, however, said that slowdown in housing was seen across all the segments and the reason for fewer launches in the affordable segment was that the availability of land was low and the cost was high. “The buyers’ sentiment is not very high and the margins are also low. The developers don’t want to get into new segments as there are already enough players. As such, a smart strategy would be to let this supply absorb the demand, after which newer projects can follow,” said Gaurav Mittal, MD, CHD Developers.
City-based real estate consultants were of the view that the supply of houses in the affordable segment was based on demand and that buyers have now become more discerning in selecting a project. “Also more people look for a house that is ready to move in and this has led to low demand for new projects and consequently low supply. Tax sops are good but these will help in the long run,” said Sanjay Sharma, a real estate consultant