MUMBAI: Steady demand for affordable housing and the government's push to increase its supply has led to a near doubling of launches in this segment in the first half of 2016 from the year-ago period, according to a report by Cushman & Wakefield. The number of new launches in affordable housing has increased by nearly 100% on year to 17,000 units across top property markets—Delhi, Mumbai, Bengaluru, Pune, Kolkata, Chennai, Ahmedabad and Hyderabad— during this period, the real estate services firm said in its report.
"Rise in the launch of affordable segment can be attributed to a steady demand for this segment of housing in key cities of Bengaluru, Delhi - NCR and Mumbai. It is heartening to see that demand for this segment, which was neglected for a very long time, is now being catered to as this formed a very large segment of latent demand," said Anshul Jain, MD, India, Cushman & Wakefield. "The uptake of affordable segment in the market will have a cascading impact on the overall economy at large," Demand for affordable homes has grown after the government allowed first-time home buyers additional deduction while calculating tax liability.
The move, part of the government's 'Housing for All by 2022' vision, gives first-time home-buyers additional deduction of Rs 50,000 paid for loan amount less than Rs 35 lakh and for a house value less than Rs 50 lakh. Developers are aware of potential demand in this segment and are enhancing focus here as part of strategy. "The demand for quality affordable housing projects outstrips supply by alarge margin. While consumer sentiment has seen visible improvement due to various initiatives by the government during the last year. Also, urbanisation is certainly impacting demand. The real estate market has realigned itself to the current market condition and expectations of home buyers," said Brotin Banerjee, MD, Tata Housing. The company's subsidiary, Tata Value Homes, has launched more than 2,500 units across different phases of its affordable housing projects in Mumbai, Talegaon, NCR, Bangalore and Chennai in the last six months.
Tata Housing has witnessed an upsurge in purchases at these projects and expects further growth in demand for the value and affordable housing segment in near term and more so in the upcoming festive season.
Developers are gaining confidence to launch more such projects, with larger size in order to cater to the huge unmet demand. "Given latent demand for affordable housing, several large projects are in the process of being launched. Focus on affordable housing has been on the rise, given home-buyers' responses to recent launches and this will continue. We are also working on launch of a 1million-sq ft affordable housing project at Somatane near Pune," said Sunny Bijlani, director of Supreme Universal. Jain also expects to see more projects in the affordable segment to come up, given that there is a cost benefit in development of such projects. "Time taken from ground breaking to completion is lower than that for mid- or high-end apartments, while sales momentum is faster, thus helping developers realise costs earlier than usual. Further, with the government defining the affordable space as 30 sq m in tier 1 and 60 sq m in tier II along with announcement of benefits for development of such apartments, we expect this segment of residential housing to grow," he said.
Total launches, across segments, rose 17% from a year ago to 60,000 apartments. In terms of volume, however, mid-ranged housing saw the highest number of launches at 36,267 units in key market, recording 10% on-year rise.
Highest supply of affordable housing was recorded in Pune at 4,170 units followed by Bangalore at 4,155 units. Mumbai saw the highest number of total launches in the first half of 2016 with over 12,000 units being added to the residential stock across all categories, followed by Bangalore with approximately 11,000 units of new residential units launched. Chennai saw the least number of unit launches in the first half of 2016 owing to a slowdown in construction activities in the city, the report said. Mumbai, the country's most expensive property market, saw an increase in average capital values in affordable segment by around 10%, while average unit size decreased 7%. This has resulted in a marginal change increase of 2% in ticket size of the newly launched housing.
Delhi - National Capital Region, however, recorded a drop of 44% in affordable units launched at around 3,000 apartments.
The average launch price of Delhi -NCR saw a decline of 19% from a year ago, while the average unit size saw a 5% increase. The average ticket size for new launches in the affordable segment was therefore recorded at.`31lakh, down 16% from a year ago.