A recent report has revealed that the new supply of affordable homes, priced up to Rs 60 lakh each, declined 38 per ceNew supply of homes up to Rs 60 lakh decline 38% across 8 major citiesnt across eight major cities.
Real estate data analytic firm PropEquity said that in the January-March this year, the supply declined to 33,420 units, with builders focusing on developing luxury flats.
The report attributed the fall in new supply to sharp rise in land and construction costs, which has made development of affordable housing projects less profitable or unviable.
These eight cities are Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Chennai, Kolkata, Pune and Ahmedabad, the report said.
In the same period last year, January-March, new supply of affordable homes was 53,818 units.
PropEquity data showed that the new supply in this price category fell 20 per cent during the 2023 calendar year and the declining trend continued in the first quarter of this year as well.
“The number of affordable housing units launched in the top eight cities of the country has seen a significant decline. In 2023, only 179,103 units priced under Rs 60 lakh were launched, a drop of 20 per cent compared to 2022, wherein 224,141 units were launched,” Samir Jasuja, CEO and MD of PropEquity, said.
This trend is expected to continue in 2024, he said, adding that several factors were 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.
Additionally, he said, the post-pandemic demand for larger homes is pushing developers towards mid-range and luxury segments, which offer higher margins.
The data highlighted that 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.
In the city-wise analysis, the report said that in Pune, the supply plunged to 6,836 units from 12,538 units.
New supply in Ahmedabad fell to 5,504 units from 5,971 units. Hyderabad saw a decline to 2,116 units from 2,319 units, while Chennai witnessed a fall to 501 units from 3,862 units.
New supply in Bengaluru decreased to 657 units from 3,701 units. In Kolkata, the new supply declined to 2,204 units from 2,747 units.