Affordable homes' market shares plummet to 18% in 2023
Affordable housing's share in new launches fell from 42% in July-September 2018 to 18% in 2023, with 20,920 affordable units out of a total of 116,220 in 2023.
- Republic Business
- 2 min read
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The proportion of affordable homes in the total supply of new housing has dropped to 18 per cent from over 40 per cent before the COVID-19 pandemic, according to data from Anarock. Builders are launching fewer homes priced at or below Rs 40 lakh, with the share of affordable housing in new supply decreasing significantly in the period from July to September 2023 across seven major cities.
Decline in affordability
In July-September 2018, affordable homes accounted for 42 per cent of new housing launches. In the same period in 2023, this figure dropped to 18 per cent. The total new housing supply in July-September 2023 was 1,16,220 units, with 20,920 units falling into the affordable housing category. In comparison, during July-September 2018, there were 52,120 units launched, of which 21,900 were affordable homes.
Market shift reasons
This shift in the housing market can be attributed to various factors. Real estate developers are now focusing more on luxury housing projects as they offer higher profit margins, whereas affordable housing projects have lower profit potential. Additionally, the high cost of land has made the development of affordable housing projects economically unviable.
The data also reveals a significant increase in the share of luxury homes priced at more than Rs 1.5 crore. In the last five years, this segment has tripled its presence in the market. Out of the total units launched in July-September 2023 in the top seven cities, 27 per cent (31,180 units) were luxury homes, marking the highest quarterly luxury supply in the last five years. In contrast, in the third quarter of 2018, luxury housing made up only 9 per cent of the supply.
Prashant Thakur, Regional Director & Head of Research, Anarock Group, explained that developers are leaning towards luxury housing due to its strong performance post-pandemic. Homebuyers are increasingly seeking larger homes with high-end amenities and good locations, making luxury housing with generous floor space an attractive option.
While luxury housing supply is on the rise, the share of affordable housing (homes priced at or under Rs 40 lakh) has declined to 18 per cent in Q3 2023, reflecting the changing dynamics in the real estate market.