PropTiger Q2 Report FY'16: Affordable Homes Finally At Attractive Prices, But Are They Livable Yet?

It might be time to closely look at the supply of affordable homes. It's true that demand for affordable housing is at an all-time high, especially as the supply in the segment for long has eluded home buyers. However, this might be changing. The latest Q2 report released by PropTiger Datalabs, Realty Decoder-Q2'FY16, suggests an increase in the supply of homes in the affordable category, widely defined in the price range of Rs 25 lakh – 50 lakh.

While affordable homes are welcome, home buyers are still sitting on the fence and the expectation of further price cuts might not be the only reason.

What might be holding them back?

A closer look at the supply of unsold affordable homes across cities reveals that most of them are exclusively located in new and far-flung areas of cities. The huge demand for affordable homes and the supply are at different places, literally.

In , for instance, most of the unsold homes are located at Virar, which is over 70 kilometers away from South with very difficult transportation networks in terms of fewer and crowded local trains. The other areas of Mumbai with a majority of unsold affordable homes are Bhiwandi, Dombivili and Panvel.

Noida too speaks of the same story. Most of the unsold affordable homes are in newly developed areas of Noida Extension and Yamuna Expressway. Those expressing interest in the projects in such areas are mostly investors and not end users looking to buy homes for residential purposes. Since the livability index of Yamuna Expressway and Extension is low, few families find these attractive in terms of livability.

Gurgaon is no different as most of the low-priced homes that are not selling are at Sector 18 Bhiwadi, Hasanpur and Shahjahanpur. In the main Gurgaon area, excluding Bhiwadi and Sohna, the affordable unsold units account for 51.4 per cent of the unsold inventory in the area. This clearly shows that if there are affordable units in accessible and popular areas, they will be sold like hot cakes.

IT cities and affordable homes

The IT cities of Pune and Bengaluru are a shade different as the total share of old unsold inventory over three years old (both affordable and unaffordable) are low. However, in general, the unsold inventory in these cities is high owing to extremely high construction activity and large number of projects in progress. A major share of the unsold inventory is one-year old and is at 41 per cent in Pune and 35 per cent in Bengaluru.

The number of unsold affordable homes in Pune and Bengaluru are over 40,000 each. All these units are distantly located. In , most number of unsold homes are in Wagholi, Moshi, Undri, Chakhan and Chikali. In Bengaluru, nics City area stands out with over 5,700 unsold units.

In , it is the new industrial areas like Kelambakkam and Mevallurkuppam and Avadi, which have homes that are yet to be sold. However, the total number of unsold affordable homes in these cities are much lower, at 25,000. So is Kolkata at around 20,556 in Rajarhat and New Town. Ahmedabad too comes in the same range at around 17,161 and such homes are located in newer areas of Nava Naroda and Narolgam.

Hyderabad has the lowest number of affordable unsold homes for many reasons. The average prices of the city are still low due to low construction activity after the separation of Telangana from Andhra Pradesh.

The big picture

India's unsold inventory across top nine cities is over three lakh units by the end of September 2015. The second quarterly report released by PropTiger Data Labs says that over 52 per cent of the unsold units are in the affordable category, priced lower than Rs 50 lakh. Around 16 per cent of the unsold homes are priced lower than Rs 25 lakh, according to the report, while the remaining 36 per cent are priced under Rs 50 lakh. The cities in the report include Mumbai (includes Navi & Thane), Pune, Noida (includes Greater and Yamuna Expressway), Gurgaon (includes Bhiwadi, Dharuhera & Sohna), Bengaluru, Chennai, Hyderabad, Kolkata, and Ahmedabad.