Demand for affordable homes languishes, premium homes buoyant

October 4, 2023

The mid-income and premium segments in the housing sector are thriving but the affordable segment is languishing as higher prices and costly mortgage rates are putting homes beyond the reach of those in the low income bracket.

Property consultant Knight Frank in its quarterly report on the real estate sector in the country observed there was ‘visible stress’ in the affordable segment. Sales of affordable homes — with ticket size lower than ₹50 lakh — saw an annual dip of 10 per cent in the September quarter, across the top eight cities in the country.

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Sales in the mid-segment and premium segments saw good growth, especially in the case of homes costing over ₹1 crore.

Terming the trend as of some concern, Knight Frank India’s CMD, Shishir Baijal, said that measures should be taken to ensure buoyancy in the affordable segment. He also pointed out that year to date numbers show that the sales in the premium segment had surpassed that in the affordable segment.

The data shows that the share of affordable homes have shrunk to 29 per cent of the total in the quarter under review from 36 per cent year ago.

“The trio effect of increasing prices, home loan rates and the comparatively adverse impact of the pandemic in this segment continued to weigh down on demand. This is the first time that the quarterly sales share of this segment has been eclipsed by that of the mid as well as premium segments,” the report said.

The government is working on an interest suvention scheme for urban housing, that will make home loans more affordable.

Total residential sales in Q3 of 2023 at 82,612 units was a six-year high with a modest annual growth of 12 per cent. The quarter also saw 85,549 homes being launched, a rise of 23 per cent on year. Kolkata saw the highest growth on a low base and Mumbai reported the most number of sales and launches.

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