Introduction
The demand for affordable housing in India has experienced a sharp decline in the first half of 2023, according to a recent report by Anarock data. Among the top seven cities in the country, Mumbai Metropolitan Region (MMR) and Pune stand out as the leaders in affordable housing sales during this period.
Affordable Housing Sales in MMR and Pune
MMR and Pune recorded the highest sales of affordable housing units, accounting for 37% (equivalent to 17,470 units) and 21% (approximately 9,700 units) of the total affordable housing sales in the top seven cities, respectively.
Factors Impacting Affordable Housing Segment
The affordable housing segment is facing multiple challenges that have led to the decline in both supply and demand. The impact of the pandemic-induced changes in demand and other factors have contributed to the current scenario.
Comparison with Previous Year
Anarock data indicates a notable shift from the previous year, with the total sales share of the affordable housing segment dropping to 20% in H1 2023, in contrast to 31% during the corresponding period in 2022. The number of affordable homes sold in H1 2023, out of a total of 2.29 lakh units sold across the top seven cities, was 46,650. In contrast, H1 2022 saw approximately 57,060 units sold, constituting over 31% of the total sales.
Additional Challenges
Apart from the pandemic, the lack of sound support infrastructure in distant suburbs and the absence of contemporary low-cost construction techniques have presented additional challenges for the affordable housing segment. Rising land prices across the country have made it financially unviable for developers to build low-margin mass housing, leading to reduced interest in launching affordable housing projects.
Affordable Homebuyers and New Supply
Affordable homebuyers are postponing their purchase decisions due to the surge in real estate prices over the past year. This decline in demand is also evident in the new supply of affordable housing, as developers are focusing more on mid-range, premium, and luxury projects, which have shown significantly higher demand.
Decrease in New Supply
Anarock data reveals a decrease in new supply in the affordable housing category across the top seven cities, declining from 23% in H1 2022 to 18% in H1 2023. Out of a total of 2,12,180 units launched in H1 2023, only 39,220 were in the affordable housing category. In comparison, H1 2022 saw around 38,820 affordable housing units launched out of a total of 1,71,290 units.
In H1 2023, MMR, Pune, and NCR stood out as the cities with the highest new affordable housing supply, collectively accounting for 87% of all affordable supply share among the top seven cities. However, the overall trend indicates a shrinking affordable housing segment in the Indian real estate market.
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