Affordable housing racing ahead in realty sector

One in every five houses sold in India now costs less than ₹25 lakh — the affordable category.

With government doling out housing subsidies for the economically weaker sections and increased focus of the developers on the segment, the contribution of affordable houses to total residential sales has gone up to 21 per cent from just 8 per cent three years ago, numbers from real estate consultancy Liases Foras show.

Affordable housing has become the fastest growing segment in Indian realty with maximum new launches as well. “Three years back, builders were dedicating supply to the premium segment (above ₹50 lakh). Today, the market has rationalised and a major part of the new supply is directed at the affordable segment,” Pankaj Kapoor, founder and MD of Liases Foras, told BusinessLine .

Between the first quarter of 2016 and 2019, when affordable segment almost tripled in sales, the share of luxury homes with a tag of over ₹2 crore went down from 14 per cent to just 5 per cent. In the June quarter, 10890 homes costing less than ₹25 lakh were sold, year-on-year sales growth of 32 percent.

Incentives for all

Kapoor pointed out that the incentives given by the government are attracting both buyers and developers to the affordable segment. Under the PM Awas Yojna (PMAY), households with an annual income of up to ₹18 lakh can avail ₹2.3 lakh upfront subsidy for a home. Buyers are also eligible for income tax exemption on housing loans. Moreover, developers get 100 per cent deduction for profits in affordable housing project for flats upto 30 sq metres in four metros cities and 60 sq mt in other cities completed in three years.

Rohit Poddar, Managing Director, Poddar Housing and Development, said there has been a general buoyancy in the market after structural changes like demonetisation and implementation of RERA and GST. “Consequently, confidence is coming back. The maximum pent up demand existed in the affordable segment. It is now resulting in transactions after the supply has come into the market,” he said.

Urbanisation boost

Poddar Housing focuses on affordable segment and has around 1 crore sq ft of projects being launched in the Mumbai Metropolitan Region and Pune between October and March next. “They are mostly in the affordable category,” he said.

Moreover, said Poddar, urbanisation is an unstoppable trend in the Indian market. “That creates demand for budget homes. So going forward too the affordable segment will continue to thrive,” he said.

Kapoor said the segment had much higher growth prospects than suggested in the past because it takes time for housing pipeline to build after incentives are announced.

“This pipeline started striking the market in the last two years. Earlier, there was gestation period as builders were preparing for launches. The share of affordable housing will double to 40 per cent in the next two years,” he added.

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