The share of affordable homes — costing below ₹40 lakh each — in the total fresh housing supply across seven major cities dipped to 20 per cent last year from 40 per cent in 2018, according to Anarock data.
Real estate consultant Anarock attributed the fall in the share to various factors, including costlier land, low-profit margin and lack of adequate availability of finance at a cheaper rate.
According to the data, real estate developers launched 3,57,650 units in 2022, of which only 20 per cent were in the affordable homes category, costing below ₹40 lakh per unit.
During 2018, a total of 1,95,300 units were launched across seven cities and out of that 40 per cent were in the affordable homes category.
The share of the supply of affordable housing in 2019 remained at 40 per cent in the total new launches of 2,36,560 units.
However, the share dipped to 30 per cent in 2020 in the total housing supply of 1,27,960 units.
In the 2021 calendar year, the share of new launches in the affordable homes segment further fell to 26 per cent. As many as 2,36,700 units were launched in 2021 across the seven cities.
The declining trend continued even last year and the share fell to 20 per cent.
“There are several reasons why affordable housing is in the doldrums today. One, obviously, is land. While developers can easily recoup their land costs with mid-range and premium housing, affordable housing is another matter,” Anarock Chairman Anuj Puri said.
Stating that profit margins were already wafer-thin in affordable housing projects, Anarock said it has become more difficult to develop budget homes amid a rise in input costs (cement, steel, labour, etc).
Delhi-NCR-based realty firm Signature Global Chairman Pradeep Aggarwal said, “One of the main reasons is that the cost of inputs and land prices have both risen significantly in the past few years, leaving no room for developers to launch projects in this category”.
Signature Global operates mainly in the affordable housing segment.
Anarock said the current demand is skewed towards apartments priced between ₹40 lakh and ₹1.5 crore.
Krisumi Corporation, which is developing a luxury housing project on Dwarka Expressway, Gurugram, MD Mohit Jain said, “We have witnessed a transformation in the luxury real estate market in India over the last few years”.
The preferences of home-buyers have evolved from mere opulence and grandeur to sustainable, green and technologically advanced living spaces, he added.
“As the luxury real estate market continues to grow, developers must keep pace with the changing demands of the wealthy,” Jain said.