FLATS NEW Supply Chennai 7,060 in of H1 2019
Only 29% of H1 2019 Housing Supply Qualifies for
Govt. Sops in top 7 Cities - ANAROCK
Anuj Puri, Chairman - ANAROCK Property
Consultants
- Of total 1,39,490 units launched across top 7 cities in
H1 2019, only 39,840 units fall within Govt-defined affordable category
criteria (60 sq. mt. carpet area & priced <INR 45 lakhs)
- MMR saw maximum launches at 17,700 units, followed by
Pune with 9,350 units; urban housing shortage in Maharashtra alone pegged
at 19.7 lakh units
- Bangalore, Chennai, Hyderabad & Kolkata together
comprise just 15% share (approx. 5,820 new units) of total affordable
supply
- Nearly 2.40 lakh unsold units across the top 7 cities
as on Q2 2019 are affordable but many fall outside the government's narrow
'affordable' definition – see an increase of nearly 3% against Q2 2018
Only a paltry number of developers have built
housing that meets the Government’s criteria for incentivized affordable
housing in 2019. ANAROCK data reveals that of the total housing supply of
1,39,490 units in the top 7 cities H1 2019, merely 39,840 units meet these
criteria. The Government's recent Budget ‘bonanza’ of an additional INR 1.5
lakh tax deduction on interest repayment of home loans availed till March 2020
will benefit very few people in urban India.
To avail credit subsidy benefits along with the
new Budget sops for affordable housing, a home must be priced <INR 45 lakhs
and not exceed 60 sq. mt. carpet area or approx. 850 sq. ft. built-up area,
including overall loading. Of the 1,39,490 units launched in H1 2019 in the top
7 cities, merely 29% of units qualify under the government-stipulated
affordable category.
Of the housing shortage of 19 million units in
urban India, nearly 96% pertains to the EWS and LIG categories - the target of
the government's affordable housing push. As per ANAROCK research, nearly 2.40
lakh units that are unsold across the top 7 cities as on Q2 2019 are in the
affordable category but many of these do not comply with the government's
narrow 'affordable' definition. This unsold stock has increased by nearly 3%
against the corresponding period in 2018.
|
City
|
Total New Supply in H1
2019
|
New Supply in H1 2019
<INR 45 lakh & <60 sq. m.
|
|
NCR
|
21,600
|
6,970
|
|
MMR
|
49,890
|
17,700
|
|
Bangalore
|
20,080
|
2,520
|
|
Pune
|
28,220
|
9,350
|
|
Hyderabad
|
9,000
|
880
|
|
Chennai
|
7,060
|
2,070
|
|
Kolkata
|
3,640
|
350
|
|
Total
|
1,39,490
|
39,840
|
Source: ANAROCK Research
- MMR
topped the list with the maximum launches of 17,700 units in this
category. Pune came in a distant second with 9,350 units. The urban
housing shortage in Maharashtra is pegged at 19.7 lakh homes.
- NCR
saw the launch of 6,950 units in this category in H1 2019
- Bangalore,
Chennai, Hyderabad and Kolkata together accounted for a mere 15% share at
approx. 5,820 new units in this category in H1 2019.
Hurdles
Unlike earlier, developers are quite keen on affordable
housing, despite the lower profit margins when compared to the luxury or
ultra-luxury segments. Supply follows demand - to illustrate, prominent
developer Puravankara’s affordable brand Provident Housing jacked up its new supply
in Q4 2018 jump to 10.59 mn sq. ft. as against 6.63 mn sq. ft. a year earlier,
while Puravankara's premium housing supply saw a 5% decline over the same
period.
Nevertheless, there are 'natural' barriers to deploying more
supply in the government-stipulated affordable category:
- High
input costs in urban areas
- High land prices in the municipal limits of the major cities (where
urban affordable housing is most needed) make it unfeasible for developers
to launch affordable housing projects there
- Low
buyer interest in peripheries
- Lack of basic infrastructure in the peripheral areas (where housing
within INR 45 lakh is feasible) discourages buyer interest, which curtails
supply
- Scarcity
of land – The main ingredient for
housing development is scarce in the main cities
- Restrictive
affordable housing criteria -
The government has put an excessively limiting cap on what kind of housing
qualifies for incentives and sops.
Solutions
Unlock government-held land for development:
Across cities, some portions of land falling under the
departments of Heavy Industries, Indian Railways, Port Trusts, etc. can be
released by the respective government bodies. The infusion of low-cost land
will also help curtail property prices.
Revise the price definition of affordable homes in top
cities:
The government must seriously consider revising the pricing
of homes that fall within the affordable housing price band, city-wise. While
the prescribed unit size of 60 sq. m. carpet area is fairly appropriate, the
prescribed pricing restrictions are not viable across most cities except in the
far-flung peripheries which lack liveability and accessibility.
If this price restriction is widened, many more homes will
fall within the affordable price tag and qualify. As a result, many more
aspiring property buyers can avail the multiple benefits such as lower GST
rates at 1% without ITC, government subsidies and the most recent tax deduction
of total INR 3.5 lakh on interest repayment of home loans. Such a boost to
housing sales cannot come soon enough.
Head –
Media Relations
ANAROCK
Property Consultants Pvt. Ltd.
Office
No. - 901 A, 9th Floor, Onyx, next to Westin Hotel, Koregaon Park,
Pune,
Maharashtra - 411001
+91
9657129999
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