Despite all these upheavals and market realignments in the past three years, India's housing market remained remarkably resilient and even thrived. However, there seems to have been one major 'fatality' - affordable housing. Once the source of considerable political hype, this segment is not merely just languishing today - it seems to be in the ICU. What happened?
The mid-range (INR 40 - 80 lakh), premium (INR 80 lakh – INR 1.5 Cr), and luxury segments (>INR 1.5 Cr) were the showstoppers of 2022. In contrast, affordable housing had a lean time, with more buyers in this segment going into wait-and-watch mode; unsurprisingly, new supply in this category reduced markedly.
Approx. 88,230 units were sold in Q3 2022 – a marginal increase of 4% over Q2 2022 but a 41% jump annually. NCR, MMR, Bengaluru, Pune, and Hyderabad together accounted for 90% of the sales in the quarter.
An analysis of buyer behaviour in the top seven cities in the last fiscal year FY21-22 shows that nearly 80% of demand is for mid-end and high-end homes, with the affordable housing segment accounting for a mere 10% of the demand.
this is the first time that in a quarter, NCR’s total unsold stock clocked in lower than in South India's collective unsold stock. In the West's MMR and Pune, the unsold stock declined by 10% between the pre and post-pandemic periods - from approx. 3.07 lakh units by Q1 2020 to approx. 2.75 lakh units in Q1 2022.
As of Q1 2022-end, the total available stock of affordable housing (<INR 40 lakh) in the top 7 cities is approx. 1,86,150 units; 2,34,600 units at Q1 2020-end
Chennai, Pune & MMR saw the highest supply decline of 52%, 33% & 27%, respectively
Supply of ultra-luxury homes (>INR 2.5 Cr) declined 5% in the same period – from approx. 41,750 units in Q1 2020-end to approx. 39,810 units by Q1 2022-end; MMR & Kolkata shed maximum ultra-luxury stock of 16% & 15%, respectively
Mid segment housing saw a 4% decline – from 1,97,880 units in Q1 2020-end to 1,89,310 units by Q1 2022-end
Premium & luxury homes (INR 80 lakh to INR 2.5 Cr) unsold stock increased in the same period
Mumbai, 19 April 2022: While the new supply of affordable housing has been shrinking over the last two pandemic years, demand remains healthy. ANAROCK data reveals that out of the total unsold stock across the top 7 cities, affordable housing inventory saw the most significant decline of 21% – from 2,34,600 units by Q1 2020-end to 1,86,150 units by Q1 2022-end.
The residential sector looks forward to further support beyond the mainstay demands of industry status, easy availability of finance, and GST rates reduction. In the upcoming Union Budget 2022-23, some significant moves would help spur up residential demand include:
Reviewing the overall performance of the Indian residential real estate market in 2021 shows a definite upswing. Between Jan - Sep 2021, 1.63 lakh units of new residential supply were added across the top 7 Indian cities - 27% higher than 2020 full year supply - and 1.45 lakh units were sold - 5% higher than in the whole of 2020.
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