38% fall in supply of affordable homes priced under Rs 60 lakh

The supply of affordable homes, priced up to Rs 60 lakh, fell by 38% across eight major cities in India during the January-March quarter of 2024, according to data from real estate analytics firm PropEquity. This decline, with new affordable housing units dropping to 33,420 from 53,818 units in the same period last year, is attributed to rising land and construction costs which have made affordable housing projects less viable.

Affordable housing supply

The eight cities analyzed in the report include Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Chennai, Kolkata, Pune, and Ahmedabad. PropEquity's data indicates that the trend of declining new affordable housing supply began last year, with a 20% drop in 2023 compared to 2022. Only 179,103 units priced under Rs 60 lakh were launched in 2023, down from 224,141 units in 2022.

Samir Jasuja, CEO and MD of PropEquity, pointed out that real estate prices have surged by 50-100% in some cities over the past two years, coupled with increasing construction costs, making affordable housing projects less profitable. Additionally, post-pandemic demand for larger homes is driving developers towards mid-range and luxury segments that offer higher margins.

The new supply of homes priced up to Rs 60 lakh decreased significantly in several cities. In the MMR, supply dropped to 15,202 units from 22,642 units. Pune saw a plunge to 6,836 units from 12,538 units. Similarly, Ahmedabad's supply fell to 5,504 units from 5,971 units, Hyderabad to 2,116 units from 2,319 units, Chennai to 501 units from 3,862 units, Bengaluru to 657 units from 3,701 units, and Kolkata to 2,204 units from 2,747 units. However, Delhi-NCR saw an increase to 400 units from 38 units year-on-year.

Nitin Gupta, Secretary of CREDAI NCR, Bhiwadi-Neemrana, emphasized the importance of prioritizing affordable housing to make homeownership attainable for lower and middle-income individuals. He noted that major NCR cities currently lack sufficient affordable housing supply, although developers in tier II and III cities are launching such projects.

Jasuja also highlighted the need to redefine affordable housing, suggesting that properties up to Rs 60 lakh or with an area of 60 square meters should be classified as affordable units.

PropEquity, operated by PE Analytics Ltd, reported a 37% growth in total income to Rs 44.17 crore last fiscal year, up from Rs 32.3 crore in 2022-23. The platform tracks over 1,73,000 projects by 57,500 developers across 44 cities in India.

Also watch: Home prices in India's top eight cities jump 10% in Q1 2024