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Affordable housing: Despite dip in supply, Budget 2019 sops may provide fillip, says report

Despite high demand for budget homes in the major cities, builders find it challenging to build housing in the incentivised Rs 45 lakh budget range. For a city like MMR, a budget of Rs 45 lakh is far too low, the report said.

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Residential real estate activity remained largely tepid during the second quarter of 2019 in the backdrop of Lok Sabha polls but sops for affordable housing proposed in Budget 2019 may provide the much-needed fillip to the segment, according to a report.

While housing sales in the second quarter of 2019 fell by 13 percent year-on-year and stood at 68,600 units across the top seven cities, affordable housing saw a quarterly decline of total new supply - by a significant 20 percent - from 32,060 units in the first quarter of 2019 to 25,580 units in the second quarter of 2019, says Anarock Research, adding the luxury category (priced Rs 2 crore to Rs 5 crore) saw supply increase by a whopping 60 percent, led by Hyderabad and NCR.

Despite high demand for budget homes in the major cities, builders find it challenging to build housing in the incentivised Rs 45 lakh budget range. For a city like MMR, a budget of Rs 45 lakh is far too low, it noted.

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The sops for affordable housing in the Union budget are likely to benefit 25,580 new homes across top cities but this is insufficient in light of relentless demand across metros, said the report, adding the government's Budget 'bonanza' for affordable housing – an additional Rs 1.5 lakh income tax deduction on interest paid on home loans availed till March 2020 - will incite builders to increase their supply in this category so as to attract first-time home buyers. Thus, we may see an increase in supply in this category in the coming quarters.

Hyderabad recorded the highest quarterly drop in housing absorption at 18 percent; NCR saw the least decline of 8 percent in the under Rs 45 lakh category. Bengaluru and Pune saw a drop in housing sale by 16 percent and 15 percent respectively, it said.

Housing sales and new launches usually reduce before and during the general elections period. However, on a yearly basis, housing sales jumped up by 12 percent in the second quarter of 2019 over the second quarter of 2018, while new launches increased by 36 percent during the same period.

"Going forward, with a stable government in power, residential activity is likely to pick momentum in the coming quarters. Though new launches saw a 2 percent quarterly decline in the second quarter of 2019, and affordable housing supply fell by 20 percent against the previous quarter, the luxury category (priced Rs 2 crore to Rs 5 crore) saw supply increase by a whopping 60 percent, led by Hyderabad and NCR," said Anuj Puri, Chairman, ANAROCK Property Consultants.

New launches saw a 2 percent quarterly decline and stood at 69,000 units. Four of the top 7 cities - NCR, Bengaluru, Chennai and Kolkata - saw increased new launches. New launches in luxury category (priced between Rs 2 crore to Rs 5 crore) increased by 60 percent in the second quarter of 2019 against previous quarter.
First Published on Jul 10, 2019 02:47 pm
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