Affordable housing continued to grow in 2018

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The real estate and housing market in India has rationalized in 2018 after a slew of policy interventions. Though inventory kept piling across top Indian real estate markets (MMR, NCR, Pune, Bengaluru, Hyderabad, Ahmedabad, Chennai and Kolkata) at a significant pace, sales were also witnessed.

The industry stakeholders have been stressing on the rise of the affordable housing sector for quite some time now. The Liases Foras third quarter report for the FY 2018-19 helps us gain an insight into what is actually happening in the market.

Units priced under Rs 1 crore cornered major portion of sales across key Indian cities.

Real estate market analysis in top Indian cities

Real estate markets of Ahmedabad and Kolkata show significant sales in the below Rs 50 lac bracket. Flats and properties priced between Rs 25 lakh and Rs 50 lakh attracted a lot of home buyers in NCR real estate market and Pune real estate market in third quarter of 2018-19 (Q3 FY 2018-19).

Bengaluru and Chennai show heavy movement in the Rs 25 lac – Rs 1 crore segment. Mumbai Metropolitan Region stands out with a record performance in the Rs 1 crore-Rs 2 crore bracket along with demand for flats costing less than a crore.

Hyderabad and Mumbai are the only two real estate markets to have performed fairly well in the luxury sector. This serves to prove that the families are lapping up the budget offerings.

City-wise sales distribution in units across different cost brackets in Q3 FY 2018-19

Cost bracketAhmedabadBangaloreChennaiHyderabadKolkataMMRNCRPuneTOTAL
Less than 25 Lac254145940096102825662304203811432
25 Lac - 50 Lac302026801384965155650805829535325867
50 Lac - 1 Cr112342181140213965651393242316520822
1 Cr – 2 Cr56910972831016126329613545848325
2 Cr+132267170306651865550853440
TOTAL7385872133774522343117946132791122569886

City-wise new supply distribution across different cost brackets in Q3 FY 2018-19

Cost bracketAhmedabadBangaloreChennaiHyderabadKolkataMMRNCRPuneTOTAL
Less than 25 Lac6359112690138120982489256710530
25 Lac - 50 Lac149014721790571108435561188475315904
50 Lac - 1Cr105747391210108941745201618262817278
1 Cr - 2Cr50124725181211126809887346324
2 Cr+2013981500127115261746
TOTAL370366884528262229931412564351068851782

Cost bracket wise analysis in top real estate market/cities

New supply introduced in the third quarter of 2018-19 fiscal year across the major cities shows us that Bengaluru leads the fray with maximum new supply introduced in the cost segment of Rs 50 lac – Rs 1 crore. Bengaluru is followed by Mumbai Metropolitan Region. MMR has a significant supply in Rs 1 crore – 2 crore segment apart from the under Rs 1 crore segment.

Kolkata and Chennai have majority of the supply in sub Rs 50 lac category and Ahmedabad and Pune have majority of the supply pegged below Rs 1 crore mark.

The demand is being fuelled by the growing interest of the homebuyers in the offerings. Low interest rates, growth of nuclear families and PMAY scheme has ensured a healthy sales growth.

The confidence of developers in the sector and performing property markets can attributed to a majority of factors. The boost provided by the government in the form of subsidies and rebates to the builder in addition to the slashing down of the GST rates, without input tax credit (ITC) in the recent Union budget is attracting developers to the sector.

Future outlook of housing, real estate and construction industry

With the foray of established business houses such as Tatas, Mahindra, Godrej and Dosti, quality of houses shall also improve. Hiranandani is already building around 2,300 compact homes in Thane, Panvel, and Chennai, with prices starting from Rs 55 lac.

Mahindra and Dosti have initiated projects on the outskirts of Mumbai, targeting homebuyers looking for budget homes. Developers are catering to budget and affordable segment buyers hopeful of the increasing demand for such projects in the market.

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