Is affordable housing causing a revival in residential property market?
Demonetisation, GST implmentation and RERA Act has hampered the overall growth of residential units. However, with the push for affordable housing, this segment has increased by 27% so far in 2017.
With government's push towards affordable housing, the segment has recorded a 27% year-on-year (YoY) increase in new units, Cushman & Wakefield said.
Data show that 26,081 new affordable homes were launched since the start of 2017, compared to 20,485 units in the corresponding period of the previous year.
Mumbai took the lead by accounting 40% growth in the total new launches. The city witnessed launch of 10,573 units between January – September 2017– rising by a whopping 331% from just 2,454 units a year ago same period.
This was followed by Kolkata with 3,886 new units, Pune with 3,752 units, Ahmedabad with 2,532 units and Hyderabad with 2,110 new units.
Anshul Jain, Managing Director, India Cushman & Wakefield said, "Affordable housing is an attractive proposition both for developers and consumers as the demand is huge and largely unmet."
Jain added, "The high focus of the central government has resulted in the availability of more funding options for the developers such as ECB, FDI and debt financing from national financial institutions at highly competitive rates."
On segment-wise performance, there was decline registered with high–end (-66%) and luxury (-84%) segments witnessing a significant drop in new launches.
Overall residential unit launches, however recorded a decline of 33%, and was at approximately 60,000 units in the first three quarters of 2017 (January – September).
Decline in overall residential units was an outcome of government's big-economic change like introduction of Real Estate Regulatory Act (RERA) and GST implementation.
Under new residential launches (including affordable, mid ranged high end and luxury) - Mumbai (1% growth) saw the highest number of launches at over 19,400 September 2017.
It was followed by Pune (8,400) and Bengaluru (8,200) both registering a y-o-y decline in of 41 % and 48% respectively in the total number of new residential units launched.
Chennai saw the steepest decline in new launches, which was lower by over 50% in year-to-date in 2017 over same time last year. The city only saw 2,700 new homes due to a massive slowdown in construction due to prolonged political uncertainty and delayed notification of RERA in the state.
Meanwhile, developers will focus on reducing their existing unsold inventories through more attractive offers of discounts, payment plans, freebies and gifts to take advantage of the current festive season as traditionally end-users buy more in this period, as per the research.