About 53% home buyers unhappy with affordable housing options, identify project location as a major deterrent
Top reasons for dissatisfaction with affordable housing supply include project location accessibility, construction quality, design and constricted unit sizes
Almost 53% of the homebuyers are dissatisfied with the available options in the affordable housing segment across cities. They cite project location, low construction quality, inferior design elements and small unit size as the main reasons, according to the Anarock-FICCI Homebuyer Sentiment Survey - H1 2024.
“Of the dissatisfied affordable home seekers polled in our survey, a whopping 92% respondents identify project location as the biggest grouse, while 84% state low construction quality and inferior design elements as major deterrents. As many as 68% respondents find the available unit sizes too small to be attractive,” said Anuj Puri, Chairman, ANAROCK Group.
Buyers are also dissatisfied on account of location accessibility and the main concerns center around accessibility to healthcare services, to the workplace, security concerns and accessibility to recreational facilities, the survey showed.
The survey gathered responses from 7,615 participants across 14 cities and was conducted between January and June 2024. Cities that were part of the survey included MMR, NCR, Bengaluru, Pune, Kolkata, Chennai and Hyderabad.
"Bigger homes continue to dominate buyer preferences despite spiraling prices in the last one year," said Puri. He added that over 51% of the survey respondents reflected a preference for 3BHK units while 39% said that they will settle for 2BHK options.
City-wise analysis indicated that the demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru, where over 50% respondents preferred it over other flat sizes. Conversely, over 40% participants in Kolkata, Mumbai Metropolitan Region and Pune named 2BHKs as their preferred option.
The survey also identified a growing preference for residential plots, which 20% of property seekers named as desirable options across cities. City-wise data highlighted that this preference is most pronounced in major southern cities - as reflected by 30% buyers in Chennai, 29% in Bengaluru, and 27% in Hyderabad.
Supply takes a hit
According to Anarock, declining demand for affordable housing has had a cascading impact on its supply in the last one year. The supply of affordable housing in major cities has dropped to 17% in the first nine months of 2024, from 26% of total launches in 2021. Prior to the pandemic, in 2019, affordable homes made up 40% of new projects.
In a related report by property consultancy Knight Frank India, homes priced in the ₹1 crore and above category constituted 46% of the total sales, growing 41% year-on-year with 40,328 units sold in Q3 2024. Meanwhile, units priced between ₹50 lakh to ₹1 crore accounted for 30% share of total sales with 26,011 units sold, followed by units under ₹50 lakh with 24% market share and sales of 20,769 units in Q3 2024.
The share of affordable housing during the quarter ended September declined by 14% annually with Mumbai and Kolkata emerging as the outlier markets where sales in the segment grew in year-on-year terms. “The combined impact of rising prices, higher home loan rates, and the relatively adverse effects of the pandemic in this sector persisted, suppressing demand,” the Knight Frank report noted.
Revival efforts
In a major push to revive supply in the affordable housing segment, Union Finance Minister Nirmala Sitharaman, as part of Union Budget 2024-25, announced a sizable outlay of ₹10 lakh crore under the PM Awas Yojana Urban 2.0.
Also Read: Real estate trends: Will affordable homes hold out amid a luxury housing boom?
Budget 2024 has also brought back interest subsidies under the flagship scheme setting aside ₹4,000 crore for the Credit Linked Subsidy Scheme (CLSS). The revival of the scheme, say real estate experts, is expected to boost affordability of prospective homebuyers and may increase the supply of the affordable housing stock in peripheral locations of Tier 1 and Tier 2 cities recently connected with new infrastructure.
Much of this affordable housing supply may come up along new infrastructure corridors such as highways, RRTS and the Metro, they said.
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