The pandemic has drastically altered previously dominant trends in the Indian residential industry. Notably, it has dented the general new inexpensive housing provide share across the leading 7 cities.
Latest ANAROCK analysis indicates that out of the total new launches of approx. 36,260 units across the leading 7 cities in Q2 2021, the inexpensive segment (priced <INR 40 lakh) contributed a mere 20% share (approx. 7,230 units), when the premium segment had the highest share of 36% and the mid segment had a 32% share.
Commenting on the exact same, Anuj Puri, Chairman, ANAROCK Property Consultants, mentioned, “The premium segment (priced between INR 80 lakh to INR 1.5 crore) had the highest launch share of 36% (approx. 13,130 units), followed closely by the mid-segment with a 32% share (approx. 11,760 units).”
“The main Southern cities of Hyderabad, Bengaluru and Chennai together accounted for at least 72% of the total new premium supply in the second quarter. Prominent realty hotspots NCR and MMR had the highest share of affordable housing supply at 52% of a total of 7,230 units launched in this category,” he added.
The new launch trends in each the pre and post COVID-19 periods across the leading 7 cities indicate that the new inexpensive provide share has been lowering post the pandemic.
# In 2018, out of approx. 1.95 lakh units launched in the leading 7 cities, inexpensive housing had the highest share at 40%, followed by 36% in the INR 40-80 lakh price range category and 16% in the premium segment.
# Likewise, of the total 2.37 lakh units launched in 2019, the inexpensive segment accounted for a 40% share, followed by the mid-segment with a 33% share and the premium category with a 16% share.
# However, in 2020, of the total 1.28 lakh units launched in the leading 7 cities, the inexpensive segment’s share lowered to 30%. The mid-segment had the highest share in 2020 at 40%, when the premium category saw its share enhance to 21%. The dramatic drop in inexpensive housing’s new launch share was profound from Q2 2020 onwards – the period due to the fact the pandemic.
# In H1 2021, inexpensive housing’s share of new launches dropped additional to approx. 26% of 98,380 units launched in between January and June. The mid-segment had the highest share at 39% when the premium housing segment had a 25% share. Further quarterly trend evaluation reveals that in Q1 2021, the inexpensive housing provide share was at 30% when in Q2 2021, it dropped to just 20%.
Factors Impacting Affordable Housing Supply
Notwithstanding the incumbent government’s continued focus on inexpensive housing, private players have changed their tactic on the back of the new pandemic realities. Various components could be accountable for the drop in inexpensive housing’s provide share drop:
# Abundant new inexpensive provide was launched in the leading 7 cities following the government started incentivizing this segment post-2014 to back the ‘Housing for all by 2022’ scheme. Demand for inexpensive housing remains higher, but there is now a pileup of unsold stock across cities. As per ANAROCK information, of a total of 6.54 lakh unsold units in the leading 7 cities as of Q2 2021-finish, the inexpensive segment has the highest share at 33%.
# The target audience of the inexpensive segment (numerous employed in MSMEs) has been severely impacted by the pandemic in contrast to premium and luxury category purchasers. Many inexpensive housing purchasers have had to defer obtain choices.
# Affordable housing developers’ profit margins are wafer-thin. Amid increasing inflationary trends of fundamental input charges (cement, steel, labour, and so forth.), it has turn into hard for them to launch price range residences due to the fact rising costs in this extremely expense-sensitive segment is inadvisable at this time. Also, general sales volumes have declined in the last one year for the reason that of the pandemic.
# Home loan eligibility for numerous inexpensive housing purchasers has been impacted by the pandemic due to loss of jobs and numerous MSMEs becoming shut down – resulting in drastically reduce sales in this category.