The affordable housing market in India's top seven cities is facing a downturn, with demand shrinking by 20% in H1 2023, according to ANAROCK Research. Escalating land costs and other pandemic-induced factors are being blamed. Conversely, the luxury housing segment is thriving. As a result, developers are shifting focus to mid-range and premium projects. Mumbai, Pune, and NCR saw the most new affordable housing supply in H1 2023, despite the overall contraction. The change underscores a significant shift in real estate market trends.
As the luxury residential market flourishes in India, affordable housing appears to be experiencing a contraction due to pandemic-influenced market fluctuations and various other factors. ANAROCK Research’s latest findings suggest a simultaneous reduction in both the demand and supply of affordable homes.
In the list of the top seven cities, Mumbai Metropolitan Region (MMR) and Pune emerged as leading locations for affordable home sales, capturing 37% (about 17,470 units) and 21% (around 9,700 units) of the market respectively. The National Capital Region (NCR) followed closely, contributing a 19% share (around 8,680 units) to the total affordable homes sold in the leading cities in H1 2023. Conversely, Hyderabad witnessed the smallest number of affordable homes sold (approximately 720 units), representing a mere 2% of the total sales.
Potential buyers of affordable housing are generally observed delaying their purchases due to escalating real estate prices over the past year. This decline in demand has reverberated through the new supply of affordable housing, as developers have redirected their attention to the more in-demand mid-range, premium, and luxury projects.
ANAROCK Research data shows a fall in the total share of new affordable housing supply across the top seven cities from 23% in H1 2022 to 18% in H1 2023. Among the estimated 212,180 units introduced in H1 2023, only 39,220 belonged to the affordable housing category. This is in contrast to H1 2022, when approximately 38,820 out of 171,290 newly launched units fell within this category. In terms of new supply, MMR, Pune, and NCR recorded the highest new affordable housing supply in H1 2023, collectively accounting for 87% of the total supply share.
While the affordable housing market is currently facing a slowdown due to rising land costs and pandemic-induced changes, the luxury housing segment in India is experiencing a notable surge. This shift indicates a major restructuring in the real estate market dynamics and emphasizes the need for innovative, cost-effective strategies to revive the affordable housing sector.
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