Gurugram Affordable Housing Shows Promising Growth, Offering Hope to Middle-Class Buyers

For years, the soaring property prices in Gurugram, often referred to as the 'millennium city,' have pushed homeownership beyond the reach of the middle class. Several studies have shown that developers in the city have overwhelmingly focused on luxury and premium projects, leaving the affordable-housing segment almost invisible.

However, the updated evaluation of the situation by brokerage firm Elara Securities, in its latest Real Estate Chartbook, brings a little bit of brightness. The analysis predicts that affordable housing will, henceforth, be coming back in Gurugram—a growth, which, on the other hand, might temper the ambitions of middle-class families.

According to Elara Securities, while other Tier-1 cities across India are witnessing a slowdown in demand for affordable homes, Gurugram is showing an opposite trend. The report mentions that the affordable segment experienced a significant quarter-on-quarter (QoQ) sales increase of 191 per cent. Besides, the year-on-year (YoY) sales also rose by 88 per cent.

This implies that the availability of new launches is not a barrier, and the affordability segment is the homes which buyers are actively looking for, hence the demand is way above the supply.

While demand is increasing at a rapid pace, the supply situation is quite the opposite. Elara Securities points out that:

1) The new supply in the affordable segment has fallen drastically. 2) Developers' focus remains on luxury and premium projects, which translates to limited inventory for budget-conscious buyers.

This unevenness means that demand for affordable housing is strong, yet developers are not keen to respond with the same number of new launches.

The report also states that inventory overhang, which is the time needed to sell unsold units, has increased by 9 months yearly. This is a clear indication of a mismatch between supply and demand, reduced availability of affordable stock, and developers' continuing interest in high-value segments rather than mass-market housing.

Despite the obstacles, Elara Securities posits that the enhancement of Gurugram’s affordable housing segment, though small, may be a good sign, especially when compared with the other areas of the country. The affordability segment in the whole of India is facing difficulty because of the rising construction costs, diminishing developers' profits, and regulatory hurdles. However, Gurugram’s figures signify that the city's middle-income buyers might have better chances in the future.