Real estate data analytics firm PropEquity attributed the decline in new supply to sharply rising land and construction costs, which have made the development of affordable housing projects less profitable or unviable.
According to PropEquity data, the new housing supply, up to ₹60 lakh each, stood at 33,420 units between January and March 2024 across the eight major cities, compared to 53,818 units during the year-ago period.
These eight cities are: Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Chennai, Kolkata, Pune and Ahmedabad.
Data from PropEquity showed that new supply in this price category fell by 20% in calendar year 2023 and the downward trend also continued in the first quarter of this year.
“The number of affordable housing units launched in the country’s eight largest cities has seen a significant decline. In 2023, only 179,103 units at a lower price ₹60 lakh units were launched, a decline of 20% compared to 2022, when 224,141 units were launched,” said Samir Jasuja, CEO and Managing Director, PropEquity.
This trend is expected to continue in 2024, he added.
“Several factors contribute to this decline. Rising real estate prices (up to 50-100% in some cities in the last two years) and increasing construction costs are making affordable housing projects less profitable for developers,” Jasuja said .
Additionally, he said, post-pandemic demand for larger homes is pushing developers toward the midscale and luxury segments, which offer higher margins.
Concerned about this trend, Nitin Gupta, Secretary, CREDAI NCR, Bhiwadi-Neemrana, said prioritizing affordable housing is essential to make the dream of homeownership achievable for low and middle income earners.
“Unfortunately, major cities in the NCR like Noida, Gurgaon and Delhi currently lack sufficient housing,” 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 housing priced up to ₹60 lakh MMR declined to 15,202 units between January and March, compared to 22,642 units during the year-ago period.
In Pune, supply fell 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 saw a decline to 501 units from 3,862 units.
New supply in Bangalore increased from 3,701 units to 657 units. In Kolkata, new supply fell to 2,204 units from 2,747 units.
However, the new housing supply up to ₹60 lakh increased in Delhi-NCR to 400 units in January-March this year, compared to 38 units last year.
Jasuja also highlighted the need to change the definition of affordable housing.
“As property prices have increased in cities, properties up to ₹60 lakh and/or units measuring 60 square meters should be termed as affordable units.”
PE Analytics Ltd, which is publicly traded and runs the PropEquity platform, reported 37% growth in total revenue at ₹44.17 crores from the last financial year of ₹32.3 crore in 2022-23.
PropEquity is an online provider of analytics, data and deal flow covering the Indian real estate sector. The company tracks over 1,73,000 projects from 57,500 developers across 44 cities in India in real time. Its research platform generates analytics for all verticals in the residential, commercial and retail sectors.
cnbctv18-forexlive
