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 bracket	Ahmedabad	Bangalore	Chennai	Hyderabad	Kolkata	MMR	NCR	Pune	TOTAL
Less than 25 Lac	2541	459	400	96	1028	2566	2304	2038	11432
25 Lac - 50 Lac	3020	2680	1384	965	1556	5080	5829	5353	25867
50 Lac - 1 Cr	1123	4218	1140	2139	656	5139	3242	3165	20822
1 Cr – 2 Cr	569	1097	283	1016	126	3296	1354	584	8325
2 Cr+	132	267	170	306	65	1865	550	85	3440
TOTAL	7385	8721	3377	4522	3431	17946	13279	11225	69886

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

Cost bracket	Ahmedabad	Bangalore	Chennai	Hyderabad	Kolkata	MMR	NCR	Pune	TOTAL
Less than 25 Lac	635	91	1269	0	1381	2098	2489	2567	10530
25 Lac - 50 Lac	1490	1472	1790	571	1084	3556	1188	4753	15904
50 Lac - 1Cr	1057	4739	1210	1089	417	4520	1618	2628	17278
1 Cr - 2Cr	501	247	251	812	111	2680	988	734	6324
2 Cr+	20	139	8	150	0	1271	152	6	1746
TOTAL	3703	6688	4528	2622	2993	14125	6435	10688	51782

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.