- Affordable housing is witnessing uptrends and demand across markets for low and mid-income segments
- 1BHK flats are in high demand in locations such as Mumbai, Navi Mumbai, Pune and Thane
- 2 & 3BHK flats are in high demand in locations like Noida, Greater Noida
Affordable Housing has been the biggest driver for growth in the real estate sector and along with the implementation of Pradhan Mantri Awas Yojana (PMAY) has reduced urban India’s housing shortage by 60%, revealed a Magicbricks Report – Residential Real Estate: Urban Housing Deficit Down 60%.
The report ‘Urban Housing Deficit Down 60% states that more than 9 lakh houses of up to Rs. 50 lakh each have been completed in just over three years and over 30 lakh have been approved. Over 60 lakh houses have been sanctioned under the PMAY (U) till 15th Oct 2018, out of which 33 lakh are under beneficiary-led construction (BLC).
Around 58.25 lakh houses are in 30 sqm (EWS) category. The cost of a BLC house ranges from Rs 3.5-5 lakh. However, the cost may go up to Rs 7.5 lakh in hilly states and some UTs. By March 2019, the government intends to sanction at least 75 lakh houses in urban India. These numbers of houses under PMAY are significant in that they address the burgeoning urban housing shortfall in the EWS and LIG categories.
The report also said that almost 40% of home buyers feel that PMAY benefits have helped them arrive at the decision to buy a house. This was in line with the consumer search trend on Magicbricks platform that revealed that the volume of searches for the actively traded property has almost doubled from June 2016 to September 2018. While 50% are return users, the remaining 50% are new buyers entering the market for the first time. About 80% currently look for completed projects while another 20% are willing to consider under construction projects.
Commenting on the report, Ms E. Jayashree Kurup, Head – Editorial & Advisory, said: “Thanks to Affordable Housing and PMAY, new end-users in the age group of 27-40 have actively
started looking for houses for self-use. They are opting for either completed stock or those that are guaranteed to complete on time, thanks to RERA registrations and enforcement by the Consumer Protection Tribunals. Statistics also reveal that PMAY, which has catalysed this housing boom, has funded about 45% projects in the beneficiary-led housing category. This is expected to reduce the housing deficit at the base of the demand pyramid. Even more significantly, the up to Rs 30 lakh category has become a formally actively searched category on Magicbricks. This reflects the steady confidence of buyers who earlier did not find the stock that was affordable for them.”
Rs.30-50 lakh preferred ticket size
The report stresses that the most preferred budget segment of Rs 30-50 lakh (23%) in Jul-Sep 2013-14 (FY) continued to rise to become 28% in the Jan-Mar 2014-15 (FY) quarter. This trend continued till 2018, when the demand for properties in the budget of Rs 30-50 lakh rose to over 30% of the searches (on Magicbricks platform), indicating a strong requirement for affordable options across India.
This also shows that affordability dominated the real estate market. Other popular budget segments in 2014 through 2018 were Rs.50-70 lakh and Rs 70 lakh to Rs 1 crore. However, demand for the Rs 70 lakh to Rs 1 crore per unit rose from 15% in 2014 to over 25% in 2018, according to Magicbricks data.
The latest Magicbricks data shows that supply remains less for properties Up to Rs 50 lakh as compared to demand. On the other hand, supply is higher for properties priced above Rs 50 lakh as shown in the graph. It shows that the push for affordable housing seems to be working and the supply is shifting slightly towards housing demand in the lower and mid-budget segments.
Affordability A Big Driver
Listed property price data on Magicbricks from 2014 to 2018 shows that the supply of 1BHK apartments was high across urban Maharashtra in cities such as Mumbai, Navi Mumbai, Thane and Pune, while it remained in low supply in other cities. In Chennai, there is a lot of 1BHK supply in the lower price ranges, in the independent house category.On the other hand, places like Noida, Greater Noida and other similar affordable locations mostly have demand for 2 and 3BHK housing units in the Rs 30-60 lakh range.
The data below hints at the supply-demand ratio of apartments in the Rs 15-100 lakh budget across the 14 cities studied. The demand and supply mismatch appears to be shrinking as more houses, in future, will be built as per the consumer’s need14 cities include Bengaluru, Chennai, Mumbai, Pune, Hyderabad, New Delhi,
Faridabad, Gurgaon, G. Noida, Ghaziabad, Navi Mumbai, Thane, Kolkata, Noida
Emphasizing on the need for collaboration between the central government ministries, state governments, urban local bodies, civil society, the private sector and financial institutions, the report highlights that a large population in India cannot afford to buy a home and thus, rental housing can be an alternative for such people.
By approving more than 60 lakh housing units, the housing shortage will come down by about 60% once all these units are handed over to their owners. This will also boost home ownership in India and encourage the government to push more aggressively for its target of ‘Housing for All by 2022’. The government and private sector need to address the housing shortage issue inclusively, thereby catering to the demand for urban housing and at the same time, contributing significantly to India’s economic growth.