Real estate companies have urged the government to increase the criteria for affordable houses to ₹65 lakh from ₹45 lakh with the overall cost of cement and other construction materials going up substantially.

While the recent Covid resurgence has posed challenges, the rising vaccinations, low home loan rates and developer incentives have been driving steady growth in housing demand, especially for affordable and mid-segment projects.

According to the recent JLL India report, new launches have increased by 38 per cent till September to 93,873 units compared to last year.

Ashok Chhajer, Chairman and Managing Director, Arihant Superstructures said the cost of construction has increased by 50 per cent in recent times and criteria for affordable housing should be revised to ₹65 lakh.

The demand for affordable housing will get further boost if the concession of one per cent GST is extended for flats sold at ₹65 lakh and above from ₹45 lakh, he added.

Growth in demand

The demand for mid-size and affordable segment has gone up substantially across the country but was more pronounced in the southern markets as IT companies offered special bonus to attract fresh talent.

Subhankar Mitra, Managing Director, Colliers India, an advisory services firm said Bangalore is the largest housing market in south India and key factors driving growth in City are their proximity to economic hubs including industrial areas, good infrastructure and upcoming metro lines.

In recent times the supply in Hyderabad is skewed to properties of above ₹40 lakh while the demand is for cheaper homes while the south and south-west corridors of the Chennai region have witnessed much of the growth for affordable projects, he added.

With remote working, the requirement for affordable housing in Tier 1, 2 and 3 cities, priced in the range of ₹40-50 lakh are expected to rise, resulting in a location-specific demand surge.

Anuj Puri, Chairman, ANAROCK Group said though it is too early to gauge the impact of Omicron virus on the real estate sector, the second wave injected fresh demand into the housing sector as it emerged an important asset during pandemic.

Given the present inflationary trends of input costs such as cement and steel, buyers are aware that developers will increase prices and genuine buyers are trying to seal deals before the price hike.

Interestingly, the primary demand for affordable housing this year is emerging from the age group between 28 and 45 years. Millennials buying homes has gone up from 49 per cent to 63 per cent during the pandemic tenure.

In the affordable segment, Chennai and Mumbai witnessed maximum launches and in the mid-range, Bengaluru, Hyderabad, Mumbai and Pune contributed over 81 per cent of total projects. Mid segment continued to account for the maximum share of 54 per cent in new launches, followed by the affordable and high-end segments with shares of 26 per cent and 19 per cent, according to JLL Research report.