Covid-19 hits affordable housing share in overall launches

The second wave of Covid-19 has impacted the share of affordable housing in overall residential supply, according to Anarock Property Consultants.

Data from Anarock showed that Covid-19 has reduced affordable housing share reduced to 20 per cent to around 7,230 units as of Q2 2021.

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In the pre-Covid-19 period, affordable housing supply share dominated the overall supplies. Post-pandemic, its share has dropped dramatically from 40 per cent in 2019 to 30 per cent in 2020 and 20 per cent in Q2 2021.

In the first half of 2021, affordable housing's share of new launches dropped further to around 26 per cent of 98,380 units, launched between January and June. The mid-segment had the highest share at 39 per cent while the premium housing segment had a 25 per cent share.

As per the report by Anarock, abundant new affordable supply was launched in the top seven cities after the government began incentivising this segment post-2014 to back the 'Housing for all by 2022' scheme. Demand for affordable housing remains high, but there is now a pileup of unsold stock across cities.

As per Anarock data, of a total of 6.54 lakh unsold units in the top seven cities as of Q2 2021-end, the affordable segment has the highest share at 33 per cent.

"The target audience of the affordable segment (many employed in MSMEs) has been severely impacted by the pandemic in contrast to premium and luxury category buyers. Many affordable housing buyers have had to defer purchase decisions," it said.

Further, amid rising inflationary trends of basic input costs, it has become difficult for developers to launch budget homes since increasing prices in this highly cost-sensitive segment is inadvisable at this time. Also, overall sales volumes have declined in the last one year because of the pandemic.

Home loan eligibility for many affordable housing buyers has been impacted by the pandemic due to loss of jobs and many MSMEs being shut down - resulting in significantly lower sales in this category, it added.

Anuj Puri, Chairman, Anarock Property Consultants, said that the premium segment had the highest launch share of 36 per cent, followed closely by the mid-segment with a 32 per cent share."

"The main southern cities of Hyderabad, Bengaluru and Chennai together accounted for at least 72 per cent of the total new premium supply in the second quarter. Prominent realty hotspots -- NCR and MMR had the highest share of affordable housing supply at 52 per cent of a total of 7,230 units launched in this category," he added.

The new launch trends in both the pre and post Covid-19 periods across the top seven cities indicate that the new affordable supply share has been reducing post the pandemic.