What Shape Is India's Affordable Housing Dream Taking?

While the government is working vigorously to meet its Housing for All by 2022 target within the stipulated time, private players, too, are leaving no stone unturned to cash in on this grand opportunity. Data prove that. Of the total new project launched across nine* major cities of India in the third quarter of the financial year 2016-17, 60 per cent were meant for the affordable segment, PropTiger DataLabs numbers indicate. In the past one year, this segment has been claiming a similar share when it comes to new project launches, PropTiger DataLabs analysis shows. This is in contrast with a decline in launches witnessed across other segments during the same period.

Here are some other interesting facts about the affordable housing segment in India that may interest you:

Gaining appetite

According to a report by PropTiger DataLabs titled Affordable Housing in India-Bringing Bharat to India-April 2017**, the demand for affordable housing is the most prominent in cities of Bengaluru, Noida, Pune and Gurgaon. In the past one year, data show, home sales in this segment have been surpassing new project launches in these cities.

The demand drivers

So, who are buying all these affordable homes? The report shows that buyers from the low- and mid-income groups working in manufacturing units, educational institutions, public sector units, information technology hubs and banking & financial services sectors are driving the demand for aff­ordable housing. With their numbers likely to increase manifold in future, the demand for affordable housing is expected to go up by leaps and bounds.

Acting pricey

Make no mistake, prices of affordable units are consistently rising. The increase in demand is also leading to a rise in prices of affordable units, with cities such as Bengaluru, Hyderabad and Pune seeing the highest upwards movement, shows the report.

"The demand for aff­ordable housing could gain further momentum in the medium term on the back of several incentives announced in the Union Budget 2017-18. In addition, the falling repo rate is expected to provide the feel-good factor for end users. The prices are likely to increase, albeit in a range-bound manner, in cities such as Pune, Bengaluru, Hyderabad, Kolkata and Mumbai, due to an increase in demand and relatively low inventory overhang," says the report.

Going the distance

But why are some affordable projects more popular among buyers than other? Their distance from business hubs, says the report, is a prime reason for that. "The attractiveness of an aff­ordable housing location hinges on its proximity to economic hubs and city centres. In line with our definition of a­ffordable housing, these projects should be in close proximity to major business hubs," says the report. According to the analysis, localities offering affordable housing options are typically about 20-30 kilometres away from city centres of cities such as Ahmedabad, Bengaluru, Gurgaon, Noida, Chennai and Hyderabad. On the other hand, this distance is as much as 30-60 kms for cities such as Mumbai and Pune.

Note:

*Cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Gurgaon (includes Bhiwadi, Dharuhera, and Sohna) , Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane) , Noida (includes Greater Noida & Yamuna Expressway) and Pune.

**The report analyses data for January-December 2016.