India's Affordable Housing Crisis: New Supply Plummets 38% in Top 8 Cities
Rising real estate prices and increasing construction costs are making affordable housing projects less profitable for developers
Real EstateAffordable HousingPropequityCredaiIndian Real Estate MarketReal EstateMay 26, 2024
The decline in new supply is attributed to the sharp rise in land and construction costs, making development of affordable housing projects less profitable or unviable. Additionally, the post-pandemic demand for larger homes is pushing developers towards mid-range and luxury segments, which offer higher margins.
Samir Jasuja, CEO and MD of PropEquity, said that several factors are contributing to this decline. \Rising real estate prices (up to 50-100 per cent in some cities over the past two years) and increasing construction costs are making affordable housing projects less profitable for developers,\ Jasuja said.
The trend is expected to continue in 2024, with the number of affordable housing units launched in top eight cities seeing a significant decline. In 2023, only 179,103 units priced under Rs 60 lakh were launched, a drop of 20% compared to 2022.
Concerned over the trend, Nitin Gupta, Secretary, CREDAI NCR, Bhiwadi- Neemrana, said prioritizing affordable homes is essential to make the dream of homeownership attainable for lower and middle-income individuals. \Unfortunately, major NCR cities like Noida, Gurgaon, and Delhi currently lack sufficient supply of these homes,\ he said.
However, developers in many tier II and III cities, including Bhiwadi, are launching affordable housing projects. According to PropEquity data, the new supply of homes priced up to Rs 60 lakh declined in MMR to 15,202 units during January-March, from 22,642 units in the year-ago period.
The Indian real estate market is undergoing a significant shift, with the demand for affordable housing increasing rapidly. However, the new supply of affordable homes is declining, making it challenging for lower and middle-income individuals to own a home.
PropEquity is an online provider of analytics, data, and deal flows covering the Indian real estate industry. The company tracks over 1,73,000 projects of 57,500 developers across 44 cities in India on a real-time basis. Its search platform generates analysis for all verticals under residential, commercial, and retail sectors.
Frequently Asked Questions
What is the reason behind the decline in new supply of affordable homes?
The decline in new supply of affordable homes is attributed to the sharp rise in land and construction costs making development of affordable housing projects less profitable or unviable
Which cities are facing a shortage of affordable housing?
Cities like Noida Gurgaon and Delhi are facing a shortage of affordable housing according to Nitin Gupta Secretary CREDAI NCR Bhiwadi- Neemrana
What is the expected trend in new supply of affordable homes in 2024?
The trend is expected to continue in 2024 with the number of affordable housing units launched in top eight cities seeing a significant decline
What is PropEquity's definition of affordable housing?
According to Samir Jasuja CEO and MD of PropEquity properties up to Rs 60 lakh and/or units having 60 square meter area should be termed as affordable units
How many projects does PropEquity track across India?
PropEquity tracks over 1 73 000 projects of 57 500 developers across 44 cities in India on a real-time basis
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